While you are probably more familiar with traditional POS systems, the cloud-based model may be entirely new.
Cloud-based POS is essentially Software as a Service (SaaS). Your data is centrally hosted on an online (cloud-based) server. With this approach, you purchase a subscription-based license to use that service. However, remember that not all cloud-based POS systems use the SaaS model since some don't use 100% cloud storage.
To simplify things, a cloud-based POS system keeps your entire database on a remote server instead of using something like physical hard drives for storage. When you need to look up a relevant piece of information, the system retrieves it from the cloud and shows up right in front of you. This encompasses all types of data for retail businesses, including inventory, customer data, transaction reports, etc.