Yes, they all get deleted from Photos; and in Drive they are moved to Trash. They also get moved to Trash on your phone if sync is on. It's also very hard to unlink Drive and Photos. I can't remember how I did it, but I turned off the feature immediately once I found out how useless it is.

This is a good change. There is no reason to sync them to Drive if Photos's underlying storage is not Drive in the first place, which it sounds like it is not.