I keep a few hundred TBR books and a dozen or so read books (that I know I'll want to browse occasionally or check something) on my Paperwhite.
All my ebooks, regardless of origin, are in Calibre, marked read or unread, and I usually send any recent purchases that I think I might wish to read sooner rather than later (as quite a few of my book buys are deals on things of the "hmm, this might be good for whenever I'm in the mood for this genre again" kind I don't necessarily intend to read them right away) directly to my Paperwhite via Send to Kindle PC app (for non-Amazon books) or download them from the Cloud (for Amazon books).
I delete the overwhelming majority of read books from my reader immediately after finishing them - I might want to re-read some of them eventually, but it's rare that I'll want to do it in the next few years. They're all on my computer (and backed up on external hard drive and in a cloud) anyway.
I quite understand the sense of "I want to keep everything on the reader because I never know what I want to read next" but for me, keeping a few hundred unread books from various genres on the Kindle at any one time is good enough - besides, I work from home and spend most of my non-reading time at my computer, so if I get an urge to read anything else, Send to Kindle is quick, doesn't require finding the USB cable and can be done in a minute.
It takes far less time to browse my Calibre library and send a book (when I've found one that looks appealing) wirelessly directly to the Kindle than it would to browse for an appealing-looking book on the reader itself.
And for those times when I'm not near my computer, e.g. when travelling .. well, the few hundred TBR books on the device itself will be more than sufficient for choice, especially since I don't necessarily have much time to read when on holidays, other than on a train or plane or at the most half an hour before sleep.