iCloud is a new feature that will wirelessly sync all of your data, photos, and video to the cloud. The iCloud automatically syncs your calendars, contacts, email to your Mac, iPhone, and iPhone read more about it below. You can also sync to other peoples devices such as a husband and wifes devices together. All of these features have been gutted from Mobileme and now are completely free. So in sense Mobileme is now Free.
Also included in this new service are Apps being synced to the iCloud service and it allows you to see all of those Apps on all devices you own. When you purchase one app, it can simultaneously download on all your other iOS devices. iBooks has similar functionality as well.
Wireless backup has also been added to iCloud, and if you get a new phone, just type in your username and password and it will download your latest backup to the phone. Backup device settings, purchased music and media, camera roll, app data, etc. Documents can also be stored in the iCloud service, if you create a Pages document it automatically syncs it to the cloud and to other devices you own that also have Pages installed on for example.
Photo Stream is another service included with iCloud which will automatically sync all of your new photos to all of your other devices. The pictures folder on the Mac is the pc equivalent, this service will also stream directly to an Apple TV as well.
The service is meant to be completely transparent and have no learning curve for new and existing users to Apple products.
iCloud will be turned on by default with 5gb of storage free. iCloud will launch iTunes only parts today for iOS 4.3 and full features on iOS 5 this fall.
Thank you Engadget for images.