In traditional network diagrams, the cloud always represented a fairly static view of an intermediary virtual area on the Internet. It basically had no real function other than passing data from one point to the other between servers on the Internet and clients. Hosting companies would host servers on the Internet where you could setup your applications to run.

The Cloud Computing model changes this slightly. Instead of providing just a
medium for messages to pass through between clients and servers, it tries to provide a number of services within the Internet "cloud" itself. These services can range from storage, computation, applications and even complete operating systems - all available as a service on the Internet - which you can go ahead and use directly. The "Software-as-a-Service" or SaaS concept is one of the major driving forces of Cloud Computing along with other concepts such as Web 2.0, the Web browser and mobile applications.