Apple won't hold your music.i still want my music stored locally though. Its my music why should i let someone else hold it?
Think of that cloudTunes thing like a huge warehouse. Inside it is the largest depository of music in the world.
A subscriber to the social web-front of iTunes Community merely uploads the library file that is in your iTunes folder. NOT the actual audio/video file.
The meta-data then gets correlated and compared to the very large array of music in South Carolina is it ?.
The results show up on your personalized page at the Social media website Apple sets up.
Now.
You want to listen to your library from home ? Cool. It's already stored in the warehouse.
Servers see the request and stream the song/video ( that it stores in the very large media collection array in S. Carolina ) to you on your iDevice.