After not being able to get my local files copied to my iPhone playlists (they work from my PC playlists), I went through the community topic here (https://support.spotify.com/us/using_spotify/features/listen-to-local-files/). The instructions indicate both the PC and iPhone need to be on the same WiFi. This is technically different than the same Network, since my PC and iPhone are on the same network, but my PC is LAN connected and my iPhone is using the WiFi access on that network.
Is this why they don't sync? Is WiFi required on both ends?