The cloud is a pretty big concept
You can have an application only pushed from the cloud, so to the users it seems lie only NAV opens but it is in fact running from the cloud, in that environment they will not be saving anything to the server in the cloud
The second option is to have a terminal server environment in the cloud, with this setup the users actually work on a desktop in the cloud and everything stays there, this can become more expensive and your local internet must be fast enough so that it is not to slow for the users, but has some great benefits
Microsoft Azure offers both of these options
Specifically the office offering could also be a local offering or a purely in the cloud application, again your choice here is dependent on how good your office internet is, cost and benefits to having someone else (in the cloud) keep it all working for you
Cheers
Nev