apple music with music on hard drive, how synchronize?

Hello, since years and years I have all my music on a external hard drive and I use Apple Music. I always change te settings of the files in Music to the hard drive and than Apple Music synchronizes correctly. I thought this make Apple search in their own library and the library is paralleled with my own files. But if I disconnect the external drive, my Mac does not find my music files anymore, while in iPhone it still works. Also I see that my music on the external drive is not 'lossless'. So I am actually wondering how the synchronization works and if there is a difference if I play the album from my own library (based on the synchronized files on the external drive) or directly from the Apple Music libary. Thanks a lot, Bert