How safe is iCloud and what exactly does it do?

I was thinking about adding storage onto my iPhone by using iCloud as my iPhone is only 8GB.
However, what exactly is iCloud and how safe is it to use? Does Apple save all your info and details for there personal use?
What does it do? Just a safe storage thing or what, I have no idea!?

Ignore what it does do and concentrate on the fact that it does not do "add storage onto your iphone".

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