Steam Cloud first appeared in Valve's smash zombie hit Left 4 Dead after being announced in mid-2008. It's a free extension of Steam. What Steam Cloud basically does is allow users of the Steam service to store their saves and settings to a main server. This lets gamers access their saves on different computers after logging in to Steam and start their game off wherever they left it and with the settings they had. This allows for a consistent gaming experience across different PCs.
The whole process is quite simple: Steam Cloud automatically transfers the changed game file to the main server ( a new save for example). Then when the game is started again the new file is downloaded from the central server and used in the game that is being played.
Developed by Valve, this service is also being used by other developers like Avalanche Studios for Just Cause 2 and a slew of indie games. Valve has already integrated this feature into its back catalogue of games and in the future Valve hopes to be able to integrate this service in all of its games.
At E3 2010, it was announced that Steam Cloud support would be coming to the Playstation 3 with Portal 2 being the first game to utilize it and that all subsequent Valve games released on the platform would include the feature.