Cloud storage keeps files on remote servers accessed via the internet, while local file storage saves data directly on physical devices you own, like your computer's hard drive or an external USB drive. The core difference lies in location and access: cloud storage is off-site and requires an internet connection to manage files, whereas local storage is on-premises and provides direct, immediate access without internet dependency. You don't physically manage the infrastructure for cloud storage; a provider handles it.

Local storage excels in personal photo libraries stored on a home PC or sensitive financial records kept only on a company's secure internal server. Conversely, cloud storage powers services like Dropbox for teams to collaborate on shared documents remotely or Netflix streaming movies from distant servers. Industries from healthcare to entertainment leverage cloud storage for scalability.

Cloud storage offers scalability, disaster recovery, and accessibility from anywhere, but raises concerns about data security, privacy regulations (like GDPR), and ongoing subscription costs. Local storage provides full control and fast performance, but requires user-managed backups and faces physical risks like hardware failure. Security risks in the cloud drive encryption adoption, while hybrid solutions combining both models are gaining traction.