Can no longer 'drag and drop' songs onto iPhone 5

You have to turn off iCloud Music Library to drag and drop non apple purchased music for sure. Maybe other music too. On iOS, settings>Music>iCloud Music Library (toggle to off). Add your music and then turn Music Library back to on if you want to use iCloud to keep your other devices updated with all your music.

Still doesn't work. Even if iCloud music setting is turned off, the earlier message still appears. Why oh why would they do such a stupid thing? Why on earth would I want to upload what's on my phone to the cloud? Why on earth must I "make available offline" stuff which were already offline.

<Edited by Host>

Yes same here. I wanted to add new music to my phone from iTunes after updating. When I dragged and dropped an album, I got the same message you got. Then I turned iCloud Music Library off which resulted in me losing everything that was already on the phone. Morons! So now even though iCloud Music Library is turned off from settings, it still says "Some of the files were not copied to the iPhone because iTunes Match is enabled on this iPhone"

I think I may have found a temporary fix.

If you lost all your music when you turned off iCloud Music Library:
Turn off Show Apple Music, Turn off iCloud Music Library. Your old music and playlists should appear on your device. It might take a while for your music to appear since some of it is downloaded from iCloud.

If you can't drag and drop music from your iTunes library:

Turn off Show Apple Music, Turn off iCloud Music Library. From iTunes and your device. This should allow you to drag and drop your library. Basically restore what was destroyed. Re-enable Show Apple Music to enjoy Apple Music services.

If you want to enable Apple Music albums offline:

You can't do this without enabling iCloud Music Library (device and itunes). Doing this will merge your current library with iCloud. This is a problem that might be solved in time. But as for now, if you want to make albums that are not in your library (phone or computer) available for offline listening, you will have to merge your existing library to the cloud.

hope this helps.

I'm not sure if this helps, but I guess what Apple are doing is making your local library part of your iCloud library. So when you add a new song or an older song to your iTunes library, you can sync it with iCloud. Once this is done the song is available on your phone automatically if iCloud music is enabled on your phone and computer. So all you would have to do is select the option to make the song available offline from the phone. So really you wouldnt have to drag and drop... simply add to iTunes and let it upload to iCloud. From your phone, you will see the song and can make available offline. Not sure how I feel about this since I like some songs in iTunes but dont want them showing up on my phone but it does make it pretty easy to sync Hope this helps.

Exactly. It's just different, not something that is broken and needs a fix.