What "Cloud" computing means is that instead of all the computer hardware and software you're using sitting on your desktop, or somewhere inside your company's network, it's provided for you as a service by another company and accessed over the Internet, usually in a completely seamless way. Exactly where the hardware and software is located and how it all works doesn't matter to you, the user -- it's just somewhere up in the nebulous "cloud" that the Internet represents.
The business decision to "move to the cloud" is often financially motivated. Companies used to have to buy their own hardware equipment, the value of which depreciated over time. But now with the cloud, companies only have to pay for what they use. This model makes it easy to quickly scale use up or down and to have data backed up for you as part of that provided service.
The rise of offshore IT services, including distributed storage, by cloud data providers creates issues that most healthcare providers have not yet realized. Even if some of the issues are realized, many covered entities and their business associates do not know where their data is currently being processed, stored, or backed up. In fact, storage or processing of protected health information (PHI) overseas may or may not be permitted or at least require additional resources, such as additional or more detailed risk assessments.