Here’s how it works: iTunes determines which songs in your collection are available in the iTunes Store. Any music with a match is automatically added to your iCloud library for you to listen to anytime, on any device. Since there are more than 18 million songs in the iTunes Store, most of your music is probably already in iCloud.
As someone that obsessively backs up their music – I will not rip all those CDs again! – this sounds pretty awesome.
I know most people don’t have this problem, but I wonder how what happens when your iPhone or iPod isn’t large enough for all your music. Do you still use iTunes to manage what gets synced across devices?
Also, if you buy music from, say, Amazon.com MP3 store (which is often aggressively cheaper than iTunes), is iTunes Match smart enough to know, “Oh, I also have Lady Gaga’s newest album in iTunes so you don’t have to upload that.” I imagine Apple doesn’t care: you’re still buying their expensive hardware.
Finally, if your hard drives go kaput, how many hoops would you have to go through to download everything and restore your library?