Basically you're paying apple 25 bucks a year so you can store your purchased music on their servers and sync them to your devices.
I don't think it will allow you to download new versions of the music you ripped. The version from the cloud will be of higher quality then you ripped, but won't be downloadable. Thus you can listen to it from the cloud, but the version on your hard disk will be the same as it has always been. (this is speculation though)
That would make sense, but as of now there is no streaming from the cloud. You would download music to your device from the cloud.
I think Apple's logic here is to get people to change their habits from buying/ripping CDs to buying from iTunes.
So if you have a large library of songs ripped from CDs and most of them are available from iTunes, then you have a year to perform your iTunes Match on them. Once you've done that, you cancel the $25/yr subscription and you still keep your Matched songs, after all, they carry the same benefits of iTS purchases (at least that's how I interpreted Jobs' comments).
I guess they figure that either you'll stop buying CDs and start buying iTunes (win for Apple), or you continue to buy CDs and keep paying the $25 (win for Apple). As long as you continue use iTunes, Apple wins. The record companies also win since they get paid whether you buy from iTunes or buy CDs ... plus they get a cut of the $25.
I don't think it will allow you to download new versions of the music you ripped. The version from the cloud will be of higher quality then you ripped, but won't be downloadable. Thus you can listen to it from the cloud, but the version on your hard disk will be the same as it has always been. (this is speculation though)