I never do this, I ONLY purchase my music on my Mac Pro Tower.
But useful for people who DO buy songs on iPhone, iPad, iPod touch, secondary computers, Apple TV...
I don't need or want any streaming at all.
But useful for people who DO stream songs. I have a second (older) Mac connected to my HDTV and sound system in the living room. I subscribe to iTunes Match, so it accesses my music library from iCloud and streams songs. I also access and stream my iCloud Music Library from my iOS device, which only has 16GB of total storage; it does not have any songs stored locally. Just because you don't use a feature, there's still a reason why it exists... 🙂
when I buy a song on my Mac it magically shows up on my iPhone. But I don't think that is "streaming", correct ?
Depends on your settings. If the song on the iPhone has a cloud with down-arrow next to it, it is streaming when you play it.
I'm not really sure why that function even exists. When I purchase a song on my Mac, it immediately downloads and is stored locally.
It's equivalent to buying a music CD, and then throwing it away. For example, I download a free song on the iTunes Store, mostly because it's free, and decide I hate it. It's on my list of purchased songs (for my Apple ID) forever, but I can "hide" it so that I don't have to see it anymore.
Song files can become corrupted, or you might accidentally delete them, or your computer's hard drive can fail. You should have a backup, but the features you find not useful allow you to get your purchased songs back from Apple's servers (iCloud) in a convenient way. That's what you did with those "about 200" songs.