Cloud computing is Internet (cloud) based development and use of computer technology (computing), whereby dynamically scalable virtualised resources are provided as a service over the internet. Users need not have knowledge of, expertise in, or control over the technology infrastructure (the cloud) that supports them.

Thats the simplified definition from Wikipedia.

In traditional computing, you have a computer or server that hosts your data and applications. Your access to and use of that data and software is limited to the capabilities of the host system. When you switch to cloud computing, your data and applications are spread out across multiple systems. Let me give a practical example.

Right now, you probably work on a Windows XP or Windows Vista computer. These operating systems follow the traditional computing model. Imagine you have two such computers networked together. Lets say you load a memory and processor intensive application on your computer. As the computer's resources are maxed out, your application slows down, while the other computer sits idle. It might have files stored on it that your computer may access, but thats it. The other computer can't assist you in completing whatever tasks you are working on.

Now, lets say both computers are running Windows 7, which is a cloud computing operating system, and you load that same intensive application. Assuming that application is able to be run in a cloud environment, once the host computer is maxed, the application will go out on the cloud and start using the available, unused resources of other computers on the cloud.

Basically, what you get is the ability to share not only data, but resources such as processor cycles and memory, over the network. You are essentially combining the components of your network into one computing entity, the cloud. At this point, as far as the applications and data are concerned, they no longer exist on "computer1" or "fileserver2" - the cloud is a single computing entity.

Some examples of cloud networks are SETI@home, BitTorrent, Skype, Google Apps, Google Search Engine(?), Microsoft Office Live, Facebook

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