Is the iTunes Match Limit for ALL Songs or just Matched Songs? On the iTunes Match page, I see this text:


  iTunes determines which songs in your collection are available in the iTunes Store. Any music with a match is automatically added to iCloud for you to listen to anytime, on any device. Since there are more than 20 million songs in the iTunes Store, chances are your music is already in iCloud. And for the few songs that aren’t, iTunes uploads what it can’t match (which is much faster than uploading your entire music library).


and:


  You can store up to 25,000 songs in iCloud (more if songs are purchased from the iTunes Store), but only what you want to play is stored on your device. So you have immediate access to a huge music library without taking up storage space.


I was under the impression that this means (my interpretation):


  iTunes will scan your whole library.  Anything found that matches something in the iTunes store will now be cloud-available for you from the iTunes store.  Anything that doesn't match will be uploaded to also be cloud-available, up to 25,000 songs.


But it looks like my interpretation is in error.  I have a library of approximately 32,000 songs, and I would estimate that a lot of it is "available" on iTunes (even though that's not where I originally obtained it... most of it is ripped from CDs).  And when I try to enable iTunes Match, it immediately tells me that I can't use it because I have over 25,000 songs.

So, it doesn't actually "scan" and "match" songs, it just blindly uploads whatever I have to cloud storage?  Or am I doing something wrong?
I think the difference is in the second paragraph that you posted. In your situation, if you have bought less then 7,000 songs from iTunes, then the rest counts against the storage.

In other words, it looks to me that only the songs that you bought from the iTunes store will not count against your 25,000 song limit. All other songs will (whether bought from somewhere such as Amazon, or ripped from a cd) likely count against that limit.

Keep in mind that you can have more than one Apple ID with purchased music in a library and according to the FAQ - only the Apple ID paying for iTunes Match/Apple Music is exempted from the 25k song limit.

It's not clear whether Family Sharing is all considered "one Apple ID" so you might want to be sure you re-download all family songs under your Apple ID if you are running up against a limit.