Cloud hosting is a step up from the shared hosting infrastructure that is commonly used today.
In a physical environment, a web site (for instance) is limited to the resource constraints that is housed within the physical unit (RAM, processing power, bandwidth etc). The concept of a cloud infrastructure no longer has this limitation – you, as a customer, can purchase as much computing power as you need from a virtually inexhaustible supply. The nature of the infrastructure means that scaling up and down is seemless and thus spikes in traffic aren’t problematic.
Load-balancing occurs at the software level and is dynamically load-balanced across a number of servers. Servers can be added or removed from the cluster with no impact or downtime on hosted applications meaning less disruption for customers. The cloud architecture has the ability to provide small and medium enterprises the stability and resilience of a web hosting architecture that a few years ago only huge corporate organisations could obtain through huge IT expenditure.
