Q: itunes setting for icloud, no option?

iCloud doesn't sync music unless you subscribed to iTunes Match (which is enabled on your MacBook by signing into the ID you used to subscribe to iTunes Match in iTunes and then going to Store>Turn On iTunes Match).

You can redownload music purchased from the iTunes store for free (in many countries), as described here: http://support.apple.com/kb/HT2519?viewlocale=en_US&locale=en_US.

Is iTunes Match required to use the iCloud Music Library option in iOS10?

iCloud Music Library is used by Apple Music as well as by iTunes Match. You can be subscribed to both or only to one of them. You have to turn iCloud Music Library on to use either.

Best of luck,

GB