Learning cloud computing terminology can take a bit of time. The first step is to realize what the cloud itself can do for your business – it's primarily about advancing IT services. The servers you use are not running locally in a data center but at a remote facility. There are options for cloud storage, compute performance on virtual servers, and running web applications. Another important term, at least when you're considering Amazon Web Services (AWS), is an instance. It looks like the fingerprint of your IT resources, including your specifications for the amount of storage, processing power, and memory. If you're a startup and want customers to use a new web application, you can set up an AWS instance for that application, setting the parameters for how it works in the cloud. Because the cloud is so "elastic" and flexible, adapting to the needs of your business and the growth of your users, a complete IT infrastructure is available to run instances. This is Amazon Elastic Compute Cloud (EC2), which is the main virtual server infrastructure available. EC2 is incredibly popular these days because it can evolve as your business changes and evolves, and because the costs associated with virtual infrastructure are based on actual usage. After understanding these basic terms, the next step is to figure out what Amazon calls an AMI (Amazon Machine Image). In Amazon cloud computing parlance, an instance runs on an Amazon machine image. It is essentially a virtual machine running in the cloud. Without AMIs, there would be no instance, no way to set parameters, and no place to run a web application, store a database in the cloud, implement an API (application programming interface), or really take advantage of cloud computing in first place . It looks like what you might see as part of an on-premises server in a data center set up for an application. An AMI is a blueprint, preconfigured for your cloud computing needs. A good way to understand how an AMI works is to think in terms of a preset in a photo editing application. In Adobe Photoshop, for example, you can use a preset that automatically determines a photo's exposure, color, brightness, and other factors. It speeds up photo editing because you can load the preset, apply it to one image, and move on to the next.