It's fingerprint matching, and yeah it's poorly implemented. Most recent complaints I've seen on this were for the fan made explicit version of Kanye's Donda. It was basically impossible to upload since it would just get matched to the clean version.
Matching is optional. If a song cannot be matched, your own copy gets uploaded instead to your private iCloud library.
Edit: well, it's a bit nuanced of course, you can not match and not sync or match and sync but you can't mix and match that configuration. So it's either sync with matching when possible or no syncing.
I have a lot of rare stuff. Demos, live albums (grateful Dead, dmb), live captures of daft punk at Coachella, underground hip hop mixtapes, CDrips of local punk and Ska bands from the 90s
I haven't had an active subscription for a while (when iTunes was the desktop app instead of Music being the desktop app) but I distinctly remember being able to set metadata in the Info panel on a song or multiple at once that prevented fingerprint matching.
Most of these services aren't ever true uploads and do matching to save time, bandwidth and space.