So what happens to the matched tunes, can you download them to your computer or are they in iCloud and you stream them to your devices?
I doubt Apple will use the word "streaming"...they will come up with some buzzword

apple:MagicSync) and will undoubtedly make the process very seamless. Upcoming songs in the iCloud may be cached while the current song is playing, downloaded and stored on the device in some hidden area so they can be "replayed" that same session, etc. As long as you have a reasonably constant or even intermittent network connection of some kind, iTunes Match will figure out a way to make it
seem like that 256kbps AAC file is at your fingertips on your device and is "yours." It may
seem the same, but it won't actually be the same as a song you purchased for $1.29. When you stop paying your annual fee, access to these files stops and they will not be left sitting on your devices for you to keep.
I have likened this to Pandora, but with your personal iTunes database as the playlist and Apple's 18 million songs to draw from. I expect your iTunes playlists will be synced to the cloud the same way they are synced to an iPod, and be presented identically on all registered devices. Press play and songs will play/download/stream/whatever from Apple's cloud library, your 5GB of iCloud space, or from the local device depending on whether you have a copy there or not.
People signing up for iTunes Match will need to understand that it is a
cloud service and all its functionality will not be available if they're not on network...just like Netflix, Pandora, Amazon Cloud Player, browsing Safari, checking email, facebook, etc. This is essentially doing for iTunes what dotMac and MobileMe have done for calendaring. I've been so used to my family's calendars syncing across computers and devices that I forget when helping some of my newly converted Mac friends that their iPhones don't sync with iCal unless they connect by USB. I'm so used to this "just working" for me over-the-air that a few times when I have been off network for an extended period I couldn't figure out why certain events weren't visible on all devices. The "master copy" of the calendar remains synced in the cloud, the devices just "display" the events so you can "see" them locally. iTunes Match will be the same...the "master copy" of the playlist will remain synced in the cloud, the devices just "play back" the songs so you can "listen" to them locally. Note the careful wording at the bottom of Apple's webpage about this:
http://www.apple.com/icloud/features/
I've little doubt Apple will surprise us with some extraordinary under-the-hood protocols that often provide a very satisfactory experience that mimics having up to 25,000 matched songs on your 16GB iPhone. But it's a
cloud service. Whether you believe these songs will be "downloaded" or "streamed" (I think it's semantics and the truth lies somewhere inbetween =

MagicSync), there will necessarily be times when you receive a message:
"This song cannot be played because you are not connected to the Internet."