iCloud is the latest coolness from Apple and its first real foray into cloud computing. They have taken a few swings at this market with mobileme, .mac and iTools, but none of these apps were as robust or all-encompassing as iCloud. You get 5 GB of storage for free.
The easiest way to explain cloud computing is that it is like using the internet as a hard drive. You can store pictures, music, books, apps, documents, pretty much anything you would put on a hard drive.
There are some questions about the security of cloud computing in general and iCloud specifically,
There is also the potential problem of inadequate bandwidth as more and more data moves to the cloud.
The siren song of ubiquitous data may trump these concerns.