Apparently there has a been a big misunderstanding with the entire Internets over iTunes Match and its streaming capabilities. AllThingsD posted details from a conversation with an Apple spokesperson claiming iTunes Match does not stream music.
While a video making the rounds today makes it seem as if Apple’s upcoming iTunes Match service will stream music from Apple’s servers to a user’s device, that’s not the case. An Apple spokesperson confirms that any music you want to access from your cloud-based “locker” will still need to be stored on your iPad, or iPhone, or whatever device you’re using to listen to the song.
People can argue that this is in fact the phone downloading the song to the iOS device's iTunes library. However, the cached song is not considered permanently downloaded and isn't counted as being in the device's music library. What is even more, in the video above, the song can be played while in Airplane Mode, but when the user switches away from the song, and then back, the device is unable to play the song. The cache has been cleared.
The reason for doing this is solely on Apple's shoulders. The deal they inked with the music labels allows them to stream music, but Apple, being the performance sticklers they are, likely doesn't trust the stability of the carrier's networks to provide enough speed and bandwidth to support a streaming music service. Apple's solution is then to download the entire track to the device, store it in a temporary cache, and provide a seamless music experience to the user.
It seems to be an issue of semantics, and despite what Apple wants to call it, iTunes Match streams music to iOS devices, albeit a little differently than traditional streaming services.
Source: AllThingsD, MacRumors