Cloud Music Library

I'm trying to sync an old iPod nano 3rd gen with music from my Apple Music subscription plan but every time I press sync on finder it gives an error message which reads "To play Apple Music songs on your iPod, turn on Cloud Music Library on your iPod." I have searched far and near to find that setting but I can't find it. If any one knows where this setting is or how to disable it, please come forward.

tl;dr - Where's the Cloud Music Library option?