>> No, the point was that you could seamlessly move between different clients

>One word. Dropbox.

Yes, Dropbox is an example of using the cloud to make it easy to move between client machines.

> I work on three computers every day. Documents, Preferences etc all sync immediately. And how does living in the cloud help me when there is network failure ?

Using Dropbox to provide immediate sync of document and preferences is living in the cloud.

And "living in the cloud" works fine in network failure, if you have a mechanism to operate offline when the network is unavailable and resync when the network is available -- whether that's because you use a desktop OS and local apps with synchronized cloud storage or webapps with offline functionality, the latter of which is a feature Google pushed very hard for years on.