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@CYOA
Over teh internetz storing that syncronises between devices in theory seamlessly providing you with all your stuff, wherever you are. Contacts/Music/Photos/Documents/Whatever - on your iPhone, your ilaptop, your iDesktop, your ipad, your iwhatever else. And the theoretical beauty is that it does it all in the background on its own over wifi.
Except that it's not that simple. First off, the amount of free storage is very limited - which is absolutely fair enough. However as you may have seen from the above posts and a cursory Google search, it seems to be buggy as fuck at the moment and have caused no end of annoyance to a large number of people.