In order for an iPhone to be found using iCloud, the "Find My iPhone" application must be set up. The application is activated through accessing iCloud online, in the Find My iPhone section, which stores any recent location information for the lost phone.
The iCloud is a database that houses information and libraries for people that own Apple devices. iCloud can be used as a form to back up any wanted files.
In order to find any lost devices they must first be near a Wi-Fi access point. Even if the iPhone is not logged on, iCloud will still continue to store its location information. This information can be accessed through the individual Apple account and is portrayed through a map application with two different dots.
A green dot means the device is online, while a gray dot means its off. If the device was turned on, within a Wi-Fi range and in a time frame of less than 24 hours, the last location the phone was seen will be displayed, along with its time. It should be noted that the map application is from a third party and may not be completely accurate. If the phone was stolen, this application can be used to track and find the offending thieves.