Following the first beta of iTunes Match yesterday it seemed that Apple was streaming music from iCloud. It turns out this is not the case.
Apple won't go into further detail about how the service will works - it was deliberately vague about it when it showed off the service at its developer conference last June, too - so we'll have to make some educated guesses here. My best hunch: If you don't "download" a music file to your library, it will sit in a more temporary cache, on a different part of your machine. Depending on the size of your machine's cache - it will presumably differ from, say, an iPhone to a MacBook - that file may occasionally be cleared out.
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