<p>The term is getting 'hotter' with Microsoft Azure and Windows 7.<br>
 What are the benefits + how does the status quo of desktop computing now change? Does the machine no longer need an OS installation (or a highly stripped down version of a typical OS)... what is needed to interact with the 'Cloud' ?</p>

<p><strong>Update</strong>: Received my first RTFM on SO today.<br>
<strong>To elaborate.. I'm interested in knowing how different is the 'new way' w.r.t. the services provided by a typical desktop OS today</strong> (read Win XP/Vista, linux flavors galore, etc.)... NOT the benefits of cloud computing.</p>

So far, it looks like the idea of having software & your data hosted at msft's data centre.
SOA seems to be related to what cloud is offering.
No need to have local software (office will run from internet, your docs will be saved there. so that, you can access it anywhere). I think, the target could be big companies - thereby giving them services (software + hardware (data storage + processing power)) on subscription basis.
An expert can shed light on how this can be useful?
Will people be willing to put everything in the cloud?