I don't understand what is so confusing about this. iTunes In The Cloud will scan for music, find it and what it doesn't find, it uploads. All of this is available to DOWNLOAD and USE on any device that you can sync with. The entire point is to REMOVE the files from your home computer and store them in the cloud, just like apps, files, and OS. "PC FREE" - remember? You no longer need a PC for any part of iOS device usage. ALL of your music will be in the cloud, available to sync to your device for usage ANYWHERE, not just when you are available on wifi to listen remotely.
Scenario: You're driving along and you think, "Damn, I'd like to listen to some Monkees, but it's not on my iPod Touch. Wish I'd thought of that before I left home. Hey, there's a McDonald's, I'll stop in for some coffee and use their wifi to download that from my iCloud." Log in, grab it, and it downloads while you chug some coffee and shove some pancakes in your face, and you're back on the road with "Daydream Believer" blasting on your car speakers.
Make sense?
This is amazing. When this becomes available, i'm going to get a good hard drive, back up what I have in iTunes to it, and then sync it all to iCloud. I'm not worrying about dying hard drives again.
So, to clarify, and forgive me for asking again.
You are saying that iTunes scans your local ripped CD's and makes iTunes versions for you on the cloud.
Then I stop at this WiFi enabled McDonalds, and I then download these new ITunes tracks from the cloud to be stored locally on my iPhone/iPad so I can then enjoy them when I'm no longer in WiFi range?
You see, the confusion is, some people are saying this won't happen.
All you will get is a "pointer" if you like to call it. Meaning whilst online, you will be able to stream these new tracks from Apple's severs.
You will never get a iTunes version to own actually on your device. It's just the rights to listen to it in the cloud.