ITunes Match streaming question?

I'm thinking about purchasing an itunesmatch subscription, but I have one question.
I want to play songs on my iPhone, but I don't want any physical data to be stored on my phone.  There is very little space on my 16 GB iPhone 4S. When streaming songs, do I have to download them?  I have seen many debates over this issue.  
Thanks for your help!!!

Hi,
itunes is looking for the link to your library that is on your external hard drive. This is the reason for your issues.
I suggest that you create a new itunes library for use whilst the external drive is not attached. Close iTunes then hold option key whilst reopening iTunes. Select craete new library, then turn on match, select add this computer. Once process is complete you will see you music that is in the cloud and you will be able to stream your music.
When your ext drive is attached, hold option key when opening iTunes, select the original library.
JIm

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