Cloud computing working on the virtualization and dynamic allocation of resources.
Architecturally, Cloud can be divided as 4 layers:
Physical layer: Contains physical servers, network etc
Infrastructure layer: Virtualized servers, networking and storage resources. Infrastructure as a Service is the hosted delivery of infrastructure services such as servers, networks and other hardware to consumers. IaaS provides consumers access to on-demand, scalable storage and compute power.
Platform layer: which contains components or services like Windows Azure, Google App Engine. A platform for development, deployment. Platform as a Service offers a complete platform and the tools to develop and deploy applications on the platform.
Application Layer: This is the layer end users interact with. This contains software which are delivered as service like Gmail, Salesforce, dropbox etc. Software as a Service is the hosted delivery of Software that consumers can access over the internet. Two features of a SaaS application are scalability and configurability. SaaS applications should be able to quickly scale with demand. In mature SaaS applications, the customer should be able to customize their instance of the software using meta-data.
You can go through following link for better understanding:
http://cloudtimes.org/2011/05/01/four-layers-of-cloud-computing/
