Hmmm -- not for me. It worked this way in iOS 5, but with 6, it would delete the music requiring everything to be downloaded again from the ITM cloud. The genius at the apple store told me this was the way it was supposed to work. Maybe my iphone was buggy and the genius misinformed -- always a possibility.
No, it at least got very buggy with iOS 6. When I turned on iTM with iOS 5 on my iPhone, it warned me it was going to delete all my music, but then didn't do it. When I "upgraded" to iOS 6, for some reason it came up with iTM turned off. When I turned it on, it again warned me it was going to delete all my music - only this time it did, and I had to redownload the local copies through Match.
People have been reporting mixed experiences toggling Match since iOS 6 came out. If it's working consistently now, it would fall into the category with the rest of the stuff they broke with iOS 6 and fixed with 6.1 (individual downloads, album artwork, March madness calendar bug, etc). I hate to get too enthusiastic about it, because I'd hate for Apple to get the message that the way to keep customers happy is to break stuff and then fix it later.
What @ejpre reports is what happened with me, as well. My phone was loaded with music, but after turning on ITM and going back to the IT app, I was greeted with the message "no content," or something like that. All songs were definitely wiped from the device. Others in this thread find similar experiences. This "correct" behavior was acknowledged by both a genius at an apple store and an apple engineer during over the phone help. Let's hope it is now working smoothly and consistently.
I think it's good everyone is sharing their personal experiences with iTunes Match as it manifested itself TO THEM when iOS 6 first came out and how it seems to have repaired itself with iOS 6.1. So, even if Spreadly is right, the fact that it didn't work like it should for some probably means it didn't for others. Documenting that here may help folks who come to this forum looking for answers to their questions.
For example, after reading gmansc1's post, a reader of this forum who has a problem similar to what Gmansc1 had with ITM would know to UPDATE to iOS 6.1 as that appears to HIS problem. (Not everyone is so conscientious about updating as folks who are active readers of Apple's Support Forum!)
I'm still feelin' the Love baby!
(But, I hope Apple doesn't know because they stil have "promises to keep and many miles to go before they sleep.")
Cheers, Mr. Luigi