You misunderstand. You take a picture of, say your dad at a family reunion, and in the background the rest of your family is just milling around. That’s not the subject, and so the AI model saves it as “people doing stuff” or whatever. When you load that photograph, the people in the background will be generated, and they won’t be your family.
This is all beside the fact that the AI may decide your subject is different from what you think it is.
This is just an extremely unreliable form of data compression, and extremely unnecessary. Phones and cameras can currently save hundreds or thousands of photographs locally, and cloud storage can save millions for free, and even more for extremely cheap. You’re solving a non-existent problem by shoehorning AI image generation in where it’s not needed.