While there may be other ways of getting stuff from here to there, the method described will work.
If I can get philosophical for a moment...
I think this idea may be foreign to some people because they are used to doing things with computers the way they have been doing things since the invention of the "personal computer". Using this model, the data and the processing hardware both exist in the same physical space. But now enter the "cloud". This is where your "stuff" exists somewhere else and your hardware (the iPad in this case) is a portal to that stuff and I think some people have not entirely wrapped their head around this "paradigm shift".
Of course this concept has been around for years with computer networks, but now we put the Internet into the mix. I don't even need to know (geographically) where my stuff is, I just need to have access to it. That way, not matter what physical piece of hardware I am using (iPad, laptop, desktop, etc.), all I need is an Internet connection.
Clear as mud, eh?