Cloud hosting refers to a potentially unlimited number of machines that are connected in a network and act as one: They comprise a cloud. The virtual machines all use the same data stored on separate networked servers, also connected in a network that acts as one data storage center. You get an entire infrastructure of connected servers and data storage.
Rather than being hosted on one single instances of a physical server, hosting is delivered on a virtual partition which draws its resource, such as disk space, from an extensive network of underlying physical servers. If one server goes offline it will have no effect on availability, as the virtual servers will continue to pull resource from the remaining network of servers.