The first thing you should understand, is that it is not a physical thing. It is a network of servers, each with different functions. Some use computing power to run applications or “deliver a service.”
For example, Adobe recently moved its creative services to the cloud. You can no longer buy the Creative Suite (Photoshop, InDesign, etc.) in a box set. Instead, you must pay a monthly subscription fee to use each individual service. That’s why it’s now called the “Adobe Creative Cloud” instead.
Other servers in the network are responsible for storing data.
For example, when you take a picture on your smartphone, it is stored on your phone’s internal memory drive. However, when you upload the photos to Instagram, you are uploading it to the cloud.
So remember it is a network of servers. Some servers provide an online service, like Adobe Creative Cloud, and others allow you to store and access data, like Instagram or Dropbox.
Chances are, you encounter it daily. From Google Drive to SkyDrive to iCloud to Evernote, any time you store information without using up your phone’s internal data, you’re storing information on the cloud.