Not on my bloody watch it doesn’t. iTunes stores music by “where I copied it to in the first place”, and it’ll get uninstalled bloody sharpish if it starts getting delusions of adequacy about the contents of my hard disk.
While I wouldn’t quite go that far, in essence mine’s the same, all my music, currently 112Gb, is in one place on my HDD, apart from my Classic, which automatically updates itself with the latest stuff that I’ve added to iTunes, effectively being a full backup as well, anything else is set to not sync music when the device is synced, then I just drag’n’drop any tracks I want, or else I set up a playlist for that device, find the tracks I want and drag them into it, then sync the device with just that playlist. Or d’n’d it. Did that with my old N95, set up a playlist, filled it to an 8Gb capacity, then d’n’d’d it into the SD card and put that in the phone. Worked fine. For two hours, after which the battery died.
Not a phone I miss particularly, but it played nice with iTunes. 😀