At first, glance if we see it is no difference between cloud gaming and online gaming where both require an internet connection to play.
But it must be seen that in Cloud Gaming we do not need to install any game assets and logic to run the application, all we need is a web browser or a special client application that is lightweight and serves to provide a list of applications or games that we want to play.
In online gaming, we usually install the assets and logic of digital games before they are played (called Game Client). This results in if there is a change in the digital game then we are required to download the patch that will be installed to our computer before it can be played.
Whereas when we play a digital game based on cloud computing, any changes in digital games do not require us to download the patch first before using it.
Do not equate cloud gaming with web-based games as in most digital games that we find on Facebook, for example, FarmVille. On web-based games basically, we still download most of the game clients (either in the form of SWF or unity3d) and only interaction between the server with the sending and receiving of data only.