For a long time I made extensive use of the iTunes Smart Playlist feature to string together groups of independent playlists into a single master or upstream playlist. It was pretty easy, since iTunes has allowed for the "Playlist is [insert name here]" condition for as long as I can remember.
I clearly haven't made a new one in some time (at least since signing up for iCloud Music Library), but it looks like this ability totally breaks when you use iCloud Music Library. Here's an example manual playlist I just created using a single track straight out of Apple Music:
I then created a Smart Playlist which has a single rule — Playlist is "Manual Playlist:"
iTunes quickly shows a cloud icon with a slash through it next to the playlist name, indicating my playlist won't be synced to other devices.
Clicking the icon displays this message:
The playlist "Smart" Playlist” can’t be added to your iCloud Music Library.
iCloud Music Library playlists can only include music from your iCloud Music Library. This playlist can’t be uploaded because it includes other media kinds or songs that are not eligible.
That's weird, because the only track in this playlist is an audio track straight from Apple Music.
I found references around the web suggesting the bitrate, media kind, frequency, or iCloud Status causing this message and affecting the ability to sync a Smart Playlist, but it all looks like BS to me. I originally hit this issue with a mix of Apple Music, Matched, and Uploaded tracks, but I have a single track on here from Apple's own music service. There's no reason it shouldn't sync.
The playlists are absolutely identical in terms of content and format:
I can't find documentation from Apple on whether Smart Playlists referencing another playlist is even supported, but it's kind of nuts that it doesn't work.