Yes, this is normal. What it's doing is making your music available for streaming by converting it to Apple Music format. If you had iTunes match it would leave the music in it's normal format. The only difference is that Apple Music format has DRM whereas iTunes match would get you standard AAC. You probably won't even notice the DRM either unless you attempted to play the music on a device which didn't let you sign in with your Apple ID. As far as I know all streaming services protect their music with DRM so this seems pretty standard.
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