Ask NH: Help me understand the cloud

I was just watching the xbox-one expo on the xbox360 dashboard, and realized during the Forza 5 preview that I didn't know what the cloud was(Forza 5 uses the cloud to move away from preset AI to a learning AI, by updating your driving patterns to the cloud). So I read up on Cloud Computing, and its defined as undefined. Not really helpful, considering I want to know what it is, or how it is used. If there are resources that help explain this that you know of, Please post them.