What is the "Cloud" and how does it work?

You are most likely referring to could computing.

Cloud computing basically means that everything is shared through the network. For example, In a could network, I could save information in the cloud without having it take up space on my computer. Then, when I want to retrieve the information, I simply connect to the cloud and download the information. Also, If I wanted to do some heavy algorithmic calculations, instead of using one computer, I could connect to the cloud and send data to the cloud. Computers/servers on the cloud network would take the data, process it, and send it back. This means that all resources are shared through the cloud, eliminating the need for super fast computers or large hard drives to store information.

Though the idea of cloud computing is unfamiliar with most people because most of the OS's of today were developed originally without the Internet or large networks, Google is currently developing the Chrome OS, which will focus on a shift towards cloud computing.