Soon, a PC will not have files, folders, or documents ↵

So where is it all stored? In "the cloud". What is the cloud? Who cares. 

I don't want to deal with the details, just make it work. 

But if we must know. 

Sachin Agarwal (co-founder of Posterous),  gives us the most succinct explanation of "the cloud" IMHO:

I want to be able to access all my data on my iPhone, iPad, and iCar. And I want them all to be in sync. I want the data to be managed automatically, backed up, secure, and fast. If I buy a video on my iPad, sync it to my TV instantly. If I take a photo on my iPhone, sync it to my iPad. Don't ask me anything, just make sure everything is everywhere.