With the introduction of iOS 11, Apple improved upon how photo permissions are handled in two ways:
Firstly, the user can choose to allow apps write-only access to the Photo Library. This is a huge privacy improvement, especially towards apps like cameras which do not need to read from it. Then, parallel with the release of the Drag and Drop feature on iPad, apps in iOS 11 are able to receive one photo or media file in a “container”. What this means is, if you drag and drop a picture onto an app, the app does not get access to your entire library but to that one picture only.
As it stands now, on iPhone, if an user wants to, say, upload one photo on Instagram, they have to give it access to the entire library. This is the issue. I believe Apple should and could make it so that there is a full split between the Photo Library and the app, and make it so that using existing photos on apps works similarly to how Drag and Drop already does. A button in the app calls a Photo Library overlay, the user chooses a picture to share with the app, and the app receives it in a sealed container.
This would be an enormous step towards a more private iOS.