In the simplest terms, cloud computing means storing and accessing data and programs over the Internet instead of your computer's hard drive. The cloud is just a metaphor for the Internet. It goes back to the days of flowcharts and presentations that would represent the gigantic server-farm infrastructure of the Internet as nothing but a puffy, white cumulus cloud, accepting connections and doling out information as it floats.
Let's be clear here. We're talking about cloud computing as it impacts individual consumers—those of us who sit back at home or in small-to-medium offices and use the Internet on a regular basis.
There is an entirely different "cloud" when it comes to business. Some businesses choose to implement Software-as-a-Service (SaaS), where the business subscribes to an application it accesses over the Internet. (Think Salesforce.com.) There's also Platform-as-a-Service (PaaS), where a business can create its own custom applications for use by all in the company. And don't forget the mighty Infrastructure-as-a-Service (IaaS), where players like Amazon, Microsoft, Google, and Rackspace provide a backbone that can be "rented out" by other companies. (For example, Netflix provides services to you because it's a customer of the cloud services at Amazon.)
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