iCloud is Apple's online service designed to make managing your iPhone, iPod touch, iPad, and Apple TV, and your iTunes content easier and more automatic than ever. Like the name implies, iCloud is based in the "cloud", which is a trendy way of saying giant data centers filled with servers that you can access from your device over Wi-Fi or 3G/4G internet, wherever you are, whenever you want. It consists of several services that work with the apps on your iPhone, iPod touch, and iPad, and with iTunes and a handful of desktop apps on Mac and Windows. Most iCloud services are completely free, although additional storage and services are available for purchase.
Because the vast majority of iCloud services are free, and because they work automatically and transparently in the background to backup your data and give you access to your content, you should absolutely use it.
With iCloud, you no longer need to plug your iPhone, iPod touch, or iPad into iTunes on your Mac or Windows PC to set it up for the first time, to keep it backed up, or to upgrade the software. Now you can do all of that, and more, faster and more easily, over-the-air (OTA) on your local Wi-Fi network. Because routine tasks, like backups, happen automatically, you don't have to worry about forgetting them and then finding out you don't have one when you need it most.
iCloud includes push email, calendaring, and contact services. That means whenever you get an email, it's immediately made available on all your devices. Whenever you make or change an appointment it shows up in your calendar on all your devices. Whenever you add or change contact information, its reflected in the contacts on all of your devices. You can access these services via the Mail, Contacts, and Calendar apps on your iPhone, iPod touch, or iPad, via the iCloud.com website from any desktop browser, or through popular mail, calendar, and contacts apps on your Mac or Windows PC.
iCloud will also sync Bookmarks, Notes, and Reminders.
The iTunes in the Cloud part of iCloud lets you access content you've bought from Apple's iTunes Store, App Store, and iBookstore, re-download it to your iPhone, iPod touch, and iPad, and to iTunes on your Mac or Windows PC, and stream your music, movies, and TV shows to your Apple TV.
iTunes Match is Apple's iCloud-based "music locker" service that allows you to store copies of all your music on Apple's servers and re-download it from any of your devices, at any time. iTunes Match isn't free, however. It comes at a price -- $24.99 a year (in the U.S.). It's also only available in 20 odd regions right now.
Photo Stream is iCloud's image backup and distribution component. Take a picture (or screen shot) on your iPhone, iPod touch, or iPad, and -- when you're on Wi-Fi -- iCloud will store a copy of that picture on Apple's servers and push copies down to all your other iOS devices, as well as your Mac and/or Windows PC. On iPhone, iPod touch, and iPad, iCloud will store up to 1000 photos, or 30 days of photos. On your Mac and/or Windows PC, iCloud will store all your photos. Photo Stream will also let you view your photos on the Apple TV.
With iCloud you no longer have to fuss with traditional computer files and folders or worry about forgetting where you put a document when you go back to look for it later. For apps that support Documents in the Cloud, all you have to remember is which app (or apps) opens the type of file you want to work on. From then on, iCloud manages everything, storing any changes you make back up to the server, and pushing down those updates to every device you have logged into your account. Create a Keynote presentation on your iPad at home, get to work and it's ready and waiting for you on your iPhone.
Find my iPhone -- or Find my iPod or Find my iPad -- keeps track of your iCloud-enabled devices so you can track them down if they're lost or stolen, and even remotely message, lock, and erase it to keep your data secure.
With Find My Friends, iCloud lets you easily locate your friends and family from your iPhone, iPad, or iPod touch. Whether you're on a family trip to a theme park or just want to meet up with some acquaintances for a drink, Find my Friends can make sure everyone knows where everyone else is.
If you still need help with setup, backup, restore, iTunes in the Cloud, iTunes Match, Photo Stream, Find my iPhone, Find my Friends, or any other iCloud feature, head on over to our iCloud Forum and ask away!
Ally Kazmucha, Chris Oldroyd, and Gary Mazo contributed major sections of this guide.