All music shows cloud icon!?

I did a backup, wiped the phone and did a restore.. For some sort of bug that increases the size of 'other' to a huge size ( memory leak?)
I got the restore completed and watched iTunes as it loaded all of the 976 songs I have checked in my library.  Leave for the airport this morning and hook in to listen to music and EVERY song on my phone has a cloud by it.  ***?!  I look in settings, general, about and it shows the phone has 2 GB free, which is exactly what iTunes showed when I sync'ed.
I never used to have these kind of bugs until the last couple years of upgrading iTunes and the IOS on my devices.  I'm an avid Apple user with an iMac, 2 MacBooks, an Apple TV, iPhone 5, iPad Air and iPad mini..  And those are just the current devices.  The newer stuff has way more bugs than the older stuff.  I feel like Apple is losing its edge.  How is iTunes syncing buggy?!  It's probably their most popular and widely used software!  My issue is obviously a software bug, just some sort of error in the handling of the presence of a song.  The phone knows it's there.. iTunes just doesn't apparently.

Go to Edit > Preferences > Store, and uncheck the box for "Show iTunes in the Cloud purchases."

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