A cloud server is simply another large virtual server.
The cloud enables you to do anything as you would previously on a virtual or hard server. The advantage for a business is that email, files, folders, in fact all data can be held on the cloud rather than an in house server.
Cost is cheaper for a business as they don't need to run or maintain their own server and software.
For simple applications, it is a step forward.
I have warned several of my clients not to progress to the cloud for a number of reasons.
1. Data is held and controlled by the provider.
2. If the internet goes down, they cannot access anything at all.
3. The biggie - Data loss. If the data gets lost, it's lost, beyond their control.
While the providers do have backups, there have been a number of recent cases of massive data loss that couldn't be reclaimed. It's estimated, but not publicised that data loss has cost companies into the billions.
I won't bore people, but those interested here is a story regarding Amazon.
Code:
http://www.businessinsider.com/amazon-lost-data-2011-4
Amazon was a while ago, but it's still happening today.
One of my customers is a government department who "migrated" to the cloud against my advice. Last week I received a call asking for help as they lost all their tenders and payroll information!