I suggest the following videos from youtube would give you the on basic understanding you need to know on what is cloud computing..
Don't want to watch the video and wanted it to be in simple words.. here is want i can say on it.
In simple terms Cloud Computing = Hardware as a Service (HaaS) + Software as a Service (SaaS).
SaaS you might be already aware of it. e.g. your web email or your online tax application for which you dont buy the whole application, but you pay for just for using it. Such apps are called SaaS.
HaaS ? simple. you don't buy the hardware to host your stuffs, but you just get it as a service and you pay just for what you need or using and for the duration you need and you don't own anything.. but you rent it.
Here goes the videos.. Which explains more about it.
In my next post i will capture how the major companies are getting into the Cloud Computing space..