I've been there too! When I first started using cloud storage, I was pretty confused about what was actually happening with my files. Basically, cloud storage just means your files are stored on someone else's computer (a server) instead of just your own device. When you upload a document or photo to something like Google Drive or Dropbox, it gets copied over the internet and saved securely on those companies' servers. You can then access it from anywhere as long as you have internet.
About security and privacy, it really depends on how careful you are and which service you pick. Most big cloud providers use encryption and have solid security measures, so for normal stuff like homework, photos, or even taxes, it's usually pretty safe. I keep my important documents in the cloud and have never had a problem, but I always make sure to use strong passwords and two-factor authentication just in case. Still, some people feel more comfortable keeping super sensitive files offline or using extra encryption, which is totally fair.
In my experience, for most people and most files, cloud storage is a great mix of convenience and safety. Just remember no system is 100% foolproof, so always keep backups if you really can’t afford to lose something. Let me know how it goes!