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Hanselman's Azure Glossary for the Confused

Microsoft's Scott Hanselman has published one:

IAAS

Infrastructure as a Service. This means, I want the computers in my closet to go away. All that infrastructure, boxes, network switches, even software licenses are a headache. I want to put them somewhere where I can't see them (we'll call it, The Cloud) and I'll pay pennies an hours. Worst case, it costs me about the same but it's less trouble. Best case, it can scale (get bigger) if some company gets popular and it will cost less than it does now.

IAAS is Virtual Machines, Networking and Storage in the cloud. Software you wrote that runs locally now will run the same up there. If you want to scale it, you'll usually scale up.

PAAS

Platform as a Service. This means Web Servers in the cloud, SQL Servers in the cloud, and more. If you like Ruby on Rails, for example, you might write software against Engine Yard's platform and run it on Azure. Or you might write iOS apps and have them talk to back end Mobile Services. Those services are your platform and will scale as you grow. Platform as a service usually hides the underlying OS from you. Lower level infrastructure and networking, load balancing and some aspects of security is abstracted away.

If you're interested in Cloud or Azure development, or you want to understand more about what I do for a living, take a look.

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