iCloud is also used to store and transfer large attachments sent from Apple's iCloud email addresses.
iCloud also stores a backup of the apps and data on your iOS devices, and — in case your device is lost or stolen — iCloud.com allows you to track your iPhone's location, as well as send a message to display on the device, lock the phone, and/or remotely wipe your data.
(iCloud keeps track of purchases through the iTunes store so that other devices have access to the content, but iTunes-sourced music, apps, movies, TV shows and books don't count against your available online storage.)
Apple allows users to buy more storage and pay for it monthly.
It's a useful service if you move from device to device, and is supported in a variety of built-in apps, including Mail, Safari and Apple's version of the Microsoft Office suite (Pages, Numbers and Keynote).