In the Philippines, we do not have Xbox Music or Xbox Video. Having said that, the OP's sentiment of "Xbox Music app is geared for cloud & streaming music" does not apply to me.
My music files mostly came from my own CDs or vinyl recording (via Audacity) so they are all local. All my music, videos, photos and documents are stored on the SC card. Windows 8.1 makes this really easy, no more fiddling with the Libraries.
The CDs are ripped using Windows Media Player on my Acer S3 running Windows 8 (then) and some were from Windows 7. The vinyl recordings are edited from Audacity and sparated track by track for proper organization.
All of these are stored on my Synology NAS and use DS Audio running on my HTC 8S to stream them.
From time to time I copy music files from the Synology NAS to my Surface RT, and they are now local to the Surface RT.
Xbox Music plays them well, except of course for the FLAC and OGG recordings in which I use Media Monkey, but that is not the topic of this discussion.
Album and track tags
As to Xbox Music's ability to keep music information, they have been reliable. In terms of being able to identify an album, here's an example. In this screenshot, you will find that one album does not have the proper information-
Xbox Music can identify the album from its online database. The first on the list is the pro[er match.
The album is now updated.
Playlists
Creating a new playlist is so easy.
Adding tracks to the playlist is also easy.
Importing playlists
I have M3U playlists from Windows Media Player. Just make sure that if the entries in the playlist file is relative, the playlist is in the folder of the tracks. Otherwise, absolute locations will be required prior to import.
I just select import playlists and Xbox Music will import playlists from the Music folder, recursively.
After import, they will all be listed accordingly.
BUG:
Never play a playlist with invalid tracks. In my example, they are the 3 Doors Down playlists. They're all in FLAC. If you accidentally play from the paylist, Xbox Music goes crazy the next time you select a playlist but going through each playlist and not actually play anything. Close Xbox Music and open it again. You will npw be able to select the offending playlist and delete it.