Whats the best way to backup my iphone?

Hello. I am brand new to iphones....actually to apple anything. Never owned an apple product.  I dont quite understand the whole itunes/icloud thing at all and I was hoping someone could explain it to me.  All that I wish to accomplish is make sure all of my stuff on my iphone(apps, pics, music, etc) is backed up regularly and in the event that my iphone is lost/stolen, breaks, needs to be replaced for any reason, or if I upgrade to a new iphone I would like to be able to recover everything. 
    OK, so far I have itunes installed on my laptop and I "sync" with that regularly (pretty much whenever I install a new app). But is my understanding correct that by syncing with itunes all of my stuff is stored locally on my laptop? If that is true, then what happens if my laptop crashes? So thats where I thought icloud came in. So I started backing up to icloud (via wifi in Settings>icLoud>storage&backup).  But I notice that when I backup this way it is actually only backing up a small amount of data (in-app data??) rather than the entire app. 
    I thought you would be able to sign into icloud.com and be able to view everything that you have ownership of or what you have backed up but that is not the case. I did download the icloud control panel to my laptop and it shows a little more information.
    So bottom line is I just need someone to explain how this stuff works and what the best course of action is for me to take regularly to make sure everything is safe, Thanks everyone!  I sincerely appreciate any help you can give me!!

bjs19781978,
There are 2 ways to back up as you have stated.  iTunes or iCloud.
You are correct in saying iTunes backs up everything on your computer.  If you do lose your computer though, you will lose that information, but you would most likely still have your phone unless you lose your computer and phone at the same time which would royally suck.
You can also back up to iCloud like you have said.  iCloud does not back up in the exact same way as iTunes, it only backs up application data, contacts, address books, and a few more things.  The advantage to this is it does it automatically if you are connected to wifi, the phone is locked, and the phone is plugged in.
Look at this link to see exactly what iCloud does back up.  Hopefully this helps a little.
Apple - iCloud - backup

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