Cloud web hosting is hosting that uses the resources of several clustered servers. Basically, this means that your website uses the virtual resources of several servers to accommodate all the aspects of hosting your site. The load is balanced, security is taken care of and hardware resources are available virtually so they can be used when needed. The cluster of servers is the cloud.
Benefits:
Cloud hosting is often a solution for web sites that have outgrown the resources of their existing shared hosting provider. If a web site is extremely popular and causes a strain on the resources supplied by a shared server, you may need to find another solution. Often this solution is dedicated hosting where your site resides on its own server. The problem with dedicated hosting, though, is that it is both significantly more expensive and requires a certain level of IT know-how. With cloud hosting, you can have many of the advantages to dedicated hosting without most of the challenges.