“iTunes in the Cloud” = iTunes Match, correct?
No, or at least that’s my understanding. iTunes in the cloud is what you have purchased in iTunes being available in the cloud (and is separate from your free 5GB allowance).
iTunes Match is a separate paid service that allows you to upload (or iTunes will match) all your non itunes music and store that in the cloud for you. It will also change the bit rate if the bitrate of the music you are uploading is of a lower quality than whatever itunes provides it at (256 DRM free IIRC).
iTunes Match is also separate from your iCloud storage
So based on that your opening statement is incorrect.