Cloud computing involves delivering IT resources over the internet on a pay-per-use basis. While cloud computing promises cost savings and allows IT to focus on strategic projects, it also presents challenges like security, availability if the service provider goes down, and companies potentially not wanting sensitive data stored externally. Cloud components include clients like mobile devices and web browsers, datacenters that house servers and infrastructure, and distributed servers that provide flexibility and failure handling. Benefits of cloud computing include familiarity with the web interface, smaller staff needs, customization abilities, and increased bandwidth and reliability, though challenges exist around privacy, security, and dependency on service providers.