⚠SOLVED! Now I know what happened!
Awhile back, I wanted to rent a Saoirse Ronan movie named Hanna. When I went to look at it and buy it, for whatever reason it was available only in the Canadian version of the iTunes store (I live in Boston, so I am usually in the US store). I do recall being asked to log into the Canadian iTunes store (I used my same US store credentials), but didn't end up renting or buying because I wanted to gift-rent it for my girlfriend, but that is not a possible transaction type.
Apparently my phone remained logged in to the Canadian iTunes store (where I have never purchased anything at all), leading to the strange screen I posted previously. I went into Settings>iTunes & App Stores, signed out of my AppleID, logged back in (where it told me that my AppleID was only valid for the US Itunes store) and it switched me to the US store. Back into the App Store app, and viola, the screen I was looking for with the All/Not on this iPhone toggle is present, and all is well.
🙂