I believe you mean Cloud Computing.
A Cloud is a set of computers that via the aid of some software layer, they are able to work together as one in a sometimes redundant manner, whereas if one fails, the system continues to operate. The idea being both redundancy and the ability to add more computers into the cloud to increase its processing power.
Providers offering Cloud Computing can rent a piece of that cloud out, just like a VPS; except with the option of selling a portion that spans multiple servers and is even more powerful than a single dedicated. However, this is most times more expensive than just using dedicated servers.
That is as quick a description as I could come up with.
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