Cloud Computer

It seems to be the biggest buzzword in computers in the last year. Cloud! It's in the cloud! Cloud-based computing seems to be where things are heading, but what does it really mean?

I kind of understand what it's all about, but on the other hand, it seems to be unnecessarily glorified and I'm sure a lot of people don't follow how it works. That was the thought process behind my funny cloud computer t-shirt. How do you connect a computer to a cloud? I suppose with a cable of some kind? I don't get it:

http://www.unpreparedmustard.c​om/funny/cloud-computer