Cloud storage allows users to store digital data on remote servers owned and managed by a hosting company rather than on local hard drives. It offers various benefits like lower costs compared to physical storage, universal accessibility of files from any internet-connected device, automatic updates and synchronization of data across devices, and use of redundancy to protect against data loss from hardware failures. While cloud storage is cheaper than local storage for businesses due to eliminating hardware purchases and maintenance, it also has some disadvantages like reliance on internet access and issues with data privacy and security control.