Cloud computing is an umbrella term that is used to describe a broad range of online services. A cloud computing service provides convenient, scalable, on-demand access to a pool of online computing resources, such as virtual machines, compute server clusters or networked storage.
Cloud computing can be broken down into a stack of three service models. Software as a Service sits at the top of the cloud stack and refers to software delivered to end users over the web, such as Google Apps or Microsoft Office 365.
In the middle are Platform as a Service tools that facilitate the creation of the cloud software, such as Amazon Elastic Beanstalk cloud application management services. At the bottom of the stack, Infrastructure as a Service accounts for the tangible resources a cloud application uses, such as physical and virtual machines, load balancers and firewalls. Well known Infrastructure as a Service providers include Amazon Elastic Compute Cloud, Rackspace and Google Compute Engine.
Cloud computing is often abused as a marketing buzzword. Terms such as "cloud enabled" or "the cloud" often appear in marketing materials that describe cloud computing services, but are quite meaningless. If in doubt about whether to use the term, refer to the National Institute of Standards and Technology cloud computing definition, which is available on their website.