I'm sure you have heard a lot of talk about the "cloud" but what does it all mean?
When you take advantage of hosting or cloud services in business, you are using storage, compute power, or some network function on a computer or server located in a data center or other location.
If you took the server out of your office and brought it to your home and connected it back to your office, this would act the same way; you created your cloud.
When you utilize a hosting provider designed for redundancy, it would be as if your server had three sources of power, multiple internet connections, added 25 more servers to fail-over to, card readers at every door inside. Don't forget you need a few on-site technicians to take care of the infrastructure.
Hosting your business in the cloud gives your business tons of flexibility. Let's say you have a software that your business runs on. When you need to add resources to a physical server, there is a 99% chance you need to purchase more hard drives, memory, add-on cards, etc. Consume a lot of time, and make sure you have good backups just in case. In the hosted server, pick a bigger "or smaller" size that best fits. ....Then press go. Since everything happens in software, it takes 1 to 2 minutes and done.
Having access to the bandwidth is also a great advantage if you have a website that customers access, and your website gets a lot of traffic. Instead of that traffic using up your in house internet connection, the hosting provider's bandwidth is used.
In summary the cloud is just using someone else's server located in their data center.
To learn more check out this link on ACS.