A dead-simple explanation.
The cloud is essentially a metaphor for the modern-day internet. The origin of the term comes from networking engineers who, when drawing up diagrams of computer networks within a company, used to draw the internet as a cloud to distinguish it from the company’s own servers and PCs.
When a business uses a “cloud computing” service, the important point is that the actual computing is not being done in that business’ office or data centre, it is being provided over the internet from somewhere else.
The “somewhere else” is one or more data centres owned by a cloud-computing provider which work in conjunction to provide a service to consumers and businesses. For example, when you do a search on Google for holidays in Greece, the search request is sent to a Google data centre which uses thousands of large computers to find the answers to your search and send it back to you.
Cloud computing is a powerful concept because it uses economies of scale to provide extremely expensive services for very little money – or even for free, in the case of Google search. Nobody would ever build a massive data centre just to carry out their own internet searches because Google (and Microsoft’s Bing) will do it for free, and for millions of people at the same time.
Other common cloud-computing services include Facebook, Gmail, Hotmail, YouTube and so on. All of these services are for individuals. Now software companies are releasing their business software as a cloud-computing service. There are many advantages to buying a cloud-computing service rather than running the same software on your own server or desktop PC.
Read more here: 5 reasons for moving to the cloud