[mustacheemperor]

From what I remember having spotify, the only way to add your own music is to add it to a playlist from your computer, and then sync that playlist locally, so it basically just uses Spotify as a relay for your music on your computer. I'm assuming Apple is like Google Play Music, which lets you add albums and songs to your library that appear the same way as the streaming ones (within your albums/artists/etc) and don't need to be synced locally.

[mynameisvlad]

By "locally", you mean "in the same network"; I don't believe you have to connect your device physically to the computer.