iCloud stores your contact information (for example, phone numbers and email addresses) and automatically pushes it to each of the devices that you set up to work with iCloud.
For example, if you change the email address for a contact using Contacts on your Mac (or Address Book with OS X v10.7.5), that change is uploaded to iCloud, then downloaded to your iOS devices and other computers.
If you turn on Contacts when you set up iCloud, you can:
View the same contact information on each of your devices (in Contacts on your iOS devices and on your Mac, or Microsoft Outlook 2007 or 2010 on a Windows computer).
Manage and edit your contacts from any computer using the iCloud Contacts web application at icloud.com/contacts.