Cluster differs from Cloud and Grid in that a cluster is a group of computers connected by a local area network (LAN), whereas cloud and grid are more wide scale and can be geographically distributed. Another way to put it is to say that a cluster is tightly coupled, whereas a Grid or a cloud is loosely coupled. Also, clusters are made up of machines with similar hardware, whereas clouds and grids are made up of machines with possibly very different hardware configurations.
To know more about cloud computing, I recommend reading this paper:
«Above the Clouds: A Berkeley View of Cloud Computing», Michael Armbrust, Armando Fox, Rean Griffith, Anthony D. Joseph, Randy H. Katz, Andrew Konwinski, Gunho Lee, David A. Patterson, Ariel Rabkin, Ion Stoica and Matei Zaharia. The following is an abstract from the above paper:
Cloud Computing refers to both the applications delivered as services over the Internet and the hardware and
systems software in the datacenters that provide those services. The services themselves have long been referred to as
Software as a Service (SaaS). The datacenter hardware and software is what we call a Cloud. When a Cloud is
made available in a pay-as-you-go manner to the general public, we call it a Public Cloud; the service being sold is
Utility Computing. We use the term Private Cloud to refer to internal datacenters of a business or other organization,
not made available to the general public. Thus, Cloud Computing is the sum of SaaS and Utility Computing, but does
not include Private Clouds. People can be users or providers of SaaS, or users or providers of Utility Computing.
The difference between a cloud and a grid can be expressed as below:
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Resource distribution: Cloud computing is a centralized model whereas grid computing is a decentralized model where the computation could occur over many administrative domains.
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Ownership: A grid is a collection of computers which is owned by multiple parties in multiple locations and connected together so that users can share the combined power of resources. Whereas a cloud is a collection of computers usually owned by a single party.
Examples of Clouds: Amazon Web Services (AWS), Google App Engine.
Examples of Grids: FutureGrid.
Examples of cloud computing services: Dropbox, Gmail, Facebook, Youtube, RapidShare.