Amazon does offer this too but I have no idea how well it works in comparison.
If it is not matches, it uploads your original file.
It was a good way to migrate from 128kbps MP3 to high quality 256 AAC
No, if you stop paying iTunes Match there is no cloud storage and no syncing
iCloud grants you 5 GB of "free" storage, including music. iTunes Match just grants you free additional storage for the matched music.
If you download the iTunes Match music then cancel, iCloud will sync the music on your devices using up some of your 5 GB pool.
So as long as you don't exceed 5 GB for your non-iTunes music collection (after they have been iTunes Match upgraded to 256 kbps) you're golden.
That's how it currently works for me. Half of my music collection is on the iTunes Store, the other half is in iCloud.
If you pay for iTunes Match, import all of your non-iTunes music into iTunes, Apple will store a DRM-free AAC file (256 kbit/s) in the "cloud" which you can play/import directly onto your mobile devices (without sync/tether).
You only have to pay for iTunes Match when you have new music to import. Once imported it is available "forever."
PS - I ironically used this to escape the Apple ecosystem. You can use it to strip DRM from old Apple DRM-ed music. You import it using match, and it converts it from an AAC-DRM track to an AAC DRM-free one and ups the quality from 128 to 256 Kbit/s.