Do you remember mainframe computing, before PCs, when you had a thin-client just providing a user interface and all your computing and storage was done by a central mainframe?
The Cloud is a bit like using the Internet as a Mainframe, in that your PC is just doing the user interface bit, and the heavy computing, storage and backups are being “rented” from Internet servers.
The advantage of this kind of outsourcing is that companies heavily using IT can slim-down their IT support department and sack the IT director. It also makes it easier for start-ups because it reduces their upfront IT investment.