Essentially, cloud mining is the same concept as paying someone, who actually has mining equipment, to go to a gold mine and mine some gold for you. The concept is simple: You pay someone (who has mining equipment and knows how to mine) a certain amount of money... to go out and mine (on your behalf)... in hopes that they will mine more gold/bitcoin... that is worth MORE than the amount of money you gave them to mine it.
Now, the REAL problem comes with "maintenance fees". Sure, they will 'mine' the bitcoin for you. Then they will turn around and take 30-57% of the money they made (for you) BACK through charging you a maintenance fee. This is exactly what happened to me dealing with ZeusHash (a/k/a Zeus Miner)