(1) If you use iTunes Match on an iPhone or iPad, does it require music to be downloaded to be played on my iPhone 5 or is it streamed like iTunes Radio?
The "streaming" that Apple has implemented for iTunes Match is not what we are traditionally used to. When iTunes Match is enabled any music that is listened to is downloaded to a temporary, managed cache on the iOS device for later listening. So internal storage on the iOS device will be used, but older tracks will be deleted by the Music app as space is needed.
(2) One issue I had the first time I tried iTunes Match (and the primary reason I stopped the service) is that once my iPhone 5 had iTunes Match turned ON, I could no longer access music or playlists that I synced from the iTunes library on my iMac. Is this still the case - it is either iTunes Match or synced music? The reason I ask is as I said my library is WELL over the 25K limit and being able to still listen to synced music would be nice.)
This behavior has not changed. With iTM enabled on an iOS device traditional syncing of music via USB/Thunderbolt is disabled and all music management takes place directly on the device.
"Does iTunes Match stream or download songs?
On a computer, any songs stored in iCloud will stream over the air when played, though you can download them at any time by clicking the iCloud download button. iOS devices will start playing tracks from iCloud as they download and will store them so that you can listen to them later even if you don’t have a network connection. Apple TV only streams songs."