This is one of the newer kind of web hosting.
The cloud is a collective name for services that you run completely online. Most of us use installed Office Programs for writing documents, but now these programs have moved onto the internet. The upside is that the cost for these programs is considerably lower. The downside is that they don’t have as many functions as the traditional programs. Also you need an internet connection to use the programs. That means that its harder to work on a plane and other locations were an internet connections wouldn’t work.
A lot of companies are moving these services to the cloud. The future will tell us if it is a smart move or not.