Believe it or not that slider is not available if iTunes Match is turned off, and my assumption would be that it's not relevant if iTunes Match is off.
Even stranger if I re-enable Match I'd already set Show All Music to off.
I've restarted the iPhone as well.
Could enabling wifi syncing have anything to do with it, separate to using Shared in Music to access LAN content via Home Sharing?
I think you experienced "grey" songs issue? I found this somewhere on this board:
So after a lot of messing around with iTunes on my mac and iPhone I finally got rid of them (ghost songs in iTunes that aren't showing on iPhone). Hopefully this will help other people too.
I followed the instructions in another thread and downloaded a program called PhoneView(the demo version worked fine, no need to pay).
Connect your iPhone to mac, open PhoneView, go to Settings>Show entire disk. Here I would recommend you back up all the contents of your phone.
Now this isn't my most technical piece of work but I went on a bit of a deleting spree (again make sure you've backed up everything).
I deleted the contents of the following folders:
Then I deleted the following files from iTunes Control>iTunes:
(and maybe a couple of others but these are the ones I remember).
I then reset the iPhone (Hold the Home and Power buttons for 5 secs), synced with iTunes and they had gone. Rejoice.
Interesting thought but I think my issue is different - even with Match off all my music is visible to play on the phone - I assume it must be streaming from the match servers but not downloading.
I may be confused, but there really ought to be a way to have match enabled but to quickly list only songs downloaded/synced rather than the whole available library from the cloud.