Except that's not cloud computing. Lots of servers sharing resources is clustering. Dynamically distributing load to clusters is part of what virtualization offers, along with fast provisioning (cloning) to scale to accommodate load. The industry has been doing all of those for much longer than the term 'Cloud' has been in vogue.
I find that wikipedia article amusing because it has a lot of self-referential terminology that describes the idea of 'cloud computing', but little to no details on how it's actually implemented. The concept is as nebulous as the name implies, and to those of us who actually work with the technologies every day it's nothing more than a pointless marketing catchphrase. Especially when people talk about 'private cloud', I scratch my head and say... "Uh, you mean datacenter? Yeah, we've got one of those."
Though, to be accurate, you can't unconditionally state that cloud services are all hosted on clusters of many servers. You don't know that, you can't know that, the whole point of 'cloud' is that you don't care. A cloud provider sells (well, leases) you a service. That service might be hosted on a state of the art geographically distributed cluster of hundreds of servers. Or it might be on a single Dell in a closet because you're the only subscriber for that service. It's up to the provider to figure out what technology to use to meet the requirements they promised as part of the service. That's why I say that 'cloud' is merely a politically correct synonym for 'outsourcing'.
Your talking about using the internet as a network medium entirely and with the load distributed directly onto the internet :/. Heres another article, says practically the same thing.
http://computer.howstuffworks.com/cloud-computing/cloud-computing.htm and the article also touches in more detail.
You have to remember that the client isn't doing 100% of the work, only a small amount of it. The reason for example I could play say, an UE3 engine game on this laptop that doesn't even have a proper graphics driver through cloud computing is the laptop doesn't handle any of the rendering or even running the game, all of that is done on the cloud, that huge load of servers connected to each other over the internet. Of course, I don't do that, but my saves in skyrim, are all stored for example on steams end.
I wouldn't say that cloud computing is a politically correct term as "Outsourcing" entirely, i'd say it's a bit more grey then that. I'm not saying it's more or less secure, do be aware of that codewalker, heck my instructors mentioned its a good question to really ask "is how secure is the cloud provider"? But you still need some local network infrastructure for your client computers to get to the cloud. It's better to think of cloud as, your outsourcing the server functions specifically, or in the case of cloud gaming your out-sourcing to compensate for crappy video card/lower ram ect. And you still need very solid bandwidth and america isn't exactly keeping up on that. If you were in europe though such services would probably be dozens of times better due to competing isp's endlessly improving their infrastructure backbones.
I tend to view it as a much more complex vpn, :/. Whether you trust cloud computing or not honestly thats up to you guys on that in general though, I mean I can't blame anyone who worries. To me it's an option, has some strong points, other bad points know.