For most people outside of IT, clouds are those things up in the sky, but even within technology, the cloud can mean many things to many people.
In essence, the cloud is a collection of servers that organisations can connect to via the internet to access software, storage and services. This compute resource usually sits somewhere in a datacentre. Virtualisation helps in provisioning the right amount of hardware and software an organisation needs, and this can be charged to an organisation down to the second if necessary.
Indeed, the cloud is often considered to be a relatively inexpensive and flexible means to store data and access services without having to make sizeable investments in hardware and software.