If you enable “Sync Mode” you are allowing the Music app to store your library in the cloud rather than just locally on your device. If you have multiple devices connected to the cloud they will all share the same library, so if you add a track on one device, within a few seconds all your other devices can see it too. So there’s no need to sync your devices any more – they stay up to date automatically. It’s magic.
But what if some of your devices don’t have enough room to save all of your tracks? Apple have thought of that: when a device downloads your library it doesn’t download any of the tracks themselves. It just downloads the “metadata” – the data about what tracks you have (including your playlists) which uses only a tiny amount of memory. You can then either choose yourself which tracks you want to download for offline access or let your device decide for itself. Either way you should not run out of memory. It’s very clever.
Downsides? Well, if all your devices have different stuff on them it is all going to get added to the cloud when you enable Sync Mode, which means that there’s sometimes a bit of sorting-out to do afterwards e.g. some duplicates. But apart from that, there really aren’t any downsides.
What does all this have to do with Playlisty?
The answer is that for a playlist to contain an Apple Music track it MUST be in the cloud. If you have a local “non-cloud” playlist you simply can’t add Apple Music tracks to it. It’s a rule.
Which means that if you want to copy any playlists to Apple Music, however you do it you are going to need “Sync Mode” switched on.