iCloud Music Library option missing.

I went to update a playlist on my phone with recently purchased music from iTunes, but when I copied the playlist from itunes to the phone and chose "replace" it told me that some music could not be transferred to the device because iCloud Music Library option is not enabled, and then the playlist emptied out of the device viewer in iTunes.

I checked several areas in settings (Music, Apple ID/iCloud, iTunes & Apps) and the iCloud Music Library is nowhere to be found on the phone. I do have Home Sharing active so both devices have the same Apple ID activated. Strangely enough after several tries the new music IS accessible on the phone, but it has the cloud/down arrow icon which, when clicked, will seemingly download but then return to the same cloud/down arrow icon. So clearly the music is in the cloud. Why can't I store it physically? Why is the playlist giving me issues. The playlist is still showing up empty when viewed on iTunes. I did sign out of iCloud on the phone and then back in, but the option still does not show up in Music settings.

This is an annoying issue and it's not the first time I've had this happen. Where is the iCloud Music Library in my settings? All other search results say it should be under the "Library" section in Settings->Music but it isn't for me. I have seen that the "merge" or "replace" options may cause this issue, but I've done all the trouble shooting and the option has not returned.