Cloud computing allows users to access shared computing resources like software, storage, and servers over the internet. It has three main types of services: Infrastructure as a Service (IaaS) provides basic computing and storage; Platform as a Service (PaaS) supplies tools to build apps; and Software as a Service (SaaS) delivers apps through a web browser. Clouds can be public, used by anyone, private for a single organization, or hybrid using both. Cloud computing offers advantages like reduced costs, scalability, and accessibility but also poses challenges regarding security, performance, and vendor dependence.