Pinned means music from the cloud is downloaded onto your device for offline listening.
I'm speaking about music I have potentially uploaded, not purchases from Apple. I have never read online that pinned music from iTunes Match (music I have chosen to download back onto my device from iCloud) will automatically re-download if it has been part of an iCloud backup. (Just so we are clear, I mean re-download back onto my iPhone so I don't have to pin it yet again.) Perhaps this is third party related but Google Play Music on the iPhone does not do this. Anything I pin from that app will not re-download.
Allow me some follow up questions.
1. If I pin say 50 GB of music from iTunes Match onto my iPhone, then I must have 50 GB of iCloud storage to complete this backup correct?
2. Once my collection is initially uploaded via iTunes Match, can I delete the music it from iTunes itself (on my Mac)? I don't like keeping music files on my computer. And then when I want to add music to iTunes Match I can simply add those songs to iTunes and delete them once they are up in the cloud?
Third party such as Google Play will not have the same syncing with iCloud that iTunes does. As long as the song is located on the device and iTunes shows it being in the cloud, it will automatically redownload. This of course is assuming your icloud backup is completely up to date with the latest songs on the device at time of restore.
As I mentioned earlier, music in iTunes Match or iTunes purchases does not count towards iCloud storage. I have 10GB of music and a 5GB iCloud account, not a problem.
Once your collection is entirely copied over to iTunes Match, assuming every song is loaded and verified by iTunes Match then you no longer would need to keep a hard copy of the music on iTunes because it will all be in the cloud and every song will have the little cloud icon next to it. "Pinned" music or offline music that has been purchased by iTunes or iTunes Match will be redownloaded for offline use via iCloud backup.
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Edit. I did just think of something. If you don't keep the hard copy of music in iTunes, I'm pretty sure next time you sync your device to your computer the songs will be erased off the device, which is one of the downsides of using iTunes. You might be able to work around this by managing music manually, but if you were to add new music via iTunes I think you would run into problems.
The idea of iTunes Match is to have a complete digital copy of all of your music so you have it everywhere when you aren't near your computer. So I'm guessing the hard copy would have to remain