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The main concept of cloud hosting is "Divide and Rule" – the resources required for maintaining your website are spread across more than one web server, and are rendered as per need basis.
This greatly reduces chances of any downtimes in case of a server malfunction.
Another noteworthy aspect is that cloud hosting allows you to manage peak loads easily, without facing any bandwidth issues, since another server can provide the additional resources in such a case. Hence, your website doesn't rely on just one server, and rather a cluster of servers that work together, termed as "the cloud".
For a more detailed understand of cloud hosting, I'd suggest reading GalaxyVision's blog, which recently had an excellent piece on cloud server hosting.
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