Music integration allows automatic creation of Music playlists corresponding to specific download tags: With this option enabled for a specific tag, all media downloads marked with this tag will automatically appear in your iTunes library, and a playlist named after the tag will be created. (The exception is the music tag, for which the files will appear under the playlist named Downloaded Music.)
Note: Music integration works only for files supported by Music. Files or unsupported formats (for instance, .mkv) will not be added to your Music library, even if marked with a tag for which integration is enabled.