HT1766 what is iTunes doing when it's "optimizing" the photos on my iPhone?

I'm syncing my iPhone and the status bar at the top of the iTunes window says it's "optimizing" ...  What does that mean?  What's happening to my pictures?  are they being "saved" or  "copied to a folder" or any other normal description of what's happening to my photos?
Seriously. 

Device reached the limit of three free icloud accounts that Apple allows to be created on one device. Need to use another Apple device to create new account. Still can use icloud accounts but can't create new one.

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