Cloud computing refers to on-demand delivery of IT resources and applications via the internet with pay-as-you-go pricing. It encompasses three service models: Infrastructure as a Service (IaaS) provides basic storage and computing resources; Platform as a Service (PaaS) provides development tools to build apps; and Software as a Service (SaaS) provides ready-to-use applications. Key characteristics include on-demand self-service, broad network access, resource pooling, rapid elasticity, and metered service.