Cloud computing is a term that has become popular of late that represents the space where your server, the actual physical place that all the code resides for your website, lives. It's not actually in a cloud but that is the term that has become popular to describe this space. It essentially means that the code does not reside on your computer, but on another server, elsewhere.
A server is just another computer that exists to keep your data on it. Well, least the portion you are paying to use. Your website is on a server, your email is on a server, any files you save are on a server. Even your Google or Yahoo email that you never delete is on computer server, someplace. Usually the server is a lot of computers that provide the network that your files are saved on, downloaded from, printed from and set to and from. It's just space that you are buying or using and everything we do on the Internet involves servers.
When you make a decision to design a website you will need to make a choice about what type of server space you need and the only way to make that decision is if you know what type of website you plan to design. Once you know what type of website you plan to design you can make choices as to what type of software are you going to use because not all software can do all functions.
Before you choose your server space ask yourself the following questions:
What is my website for? Is it personal in nature, or is it for business? If it is personal you can probably use a free system, or a very inexpensive site builder and built something simple and easy. If you want to design a full ecommerce site you will need to make considerations for how much space you'll probably need which will depend on how many products you will be selling, how much content you'll be keeping on your website and thus, on your server space.
Depending upon the software you are using to create the site, the shopping cart, the content management system and every aspect of your design will inform your choice about what type of server space to purchase. Usually, if you are not sure, you can ask the person who created the software you are using for site building to recommend a hosting service that will work with their software.
Usually they will have a good recommendation but to be sure look over all the requirements on the hosting provider's website which will usually spell out exactly the information that you need to know. The important thing to remember is that websites really aren't designed in the cloud, but with code, that is put on a server.
When someone says that it's hosted "in the cloud" this simply means that it is not on your computer. As the future unfolds we will see more and more programs being offered "in the cloud" because it uses less physical resources such as plastic to send you a disk, and cardboard which houses the disk, not to mention space on your own computer, which may be limited.