Modified from CNET article The Google Drive FAQ
Got questions about Google's new cloud storage product, Google Drive? Here are some answers.
What is Google Drive?
Google Drive is a way to store your files on Google's servers, or "in the cloud." If you run the free Google Drive application, then you get a folder on your computer that looks just like a folder on your hard disk that you can drag your files in to. Anything stored in that folder is kept on your hard disk and also copied to your account in the cloud. You can access those files from drive.google.com or from other computers, including mobile devices.
Google Drive is also the new name for Google Docs, which is Google's suite of Web-based productivity tools -- its word processor (Docs), spreadsheet (Sheets), and presentation app (Slides). Documents you create using these tools now show up in your Google Drive. Sort of.
What do you mean, "sort of?"
For the time being, while you can see documents created or shared with you using the Google Docs tools in your Google Drive on your computers, the data in those files is not stored or copied to your computers. Rather, what you see in your Google Drive are links to your files. If you open one, it'll open in the browser-based Google app.
Files that you drag into your Drive from your hard disk are actually copied to the cloud. They're also synchronized to your other computers that use Google Drive.
What is synchronization?
One of the coolest things ever. When you use a synchronizing storage product, like Google Drive or Dropbox, any file you put in the drive, and anything you change that's stored in the drive, is automatically updated not just in the cloud but on all the other devices that you have connected to the Drive (as long as your computer is connected to the Internet and the Drive application is running). So you can start working on a file on one computer, close it, and then open it on a second computer, and what you'll see is the version you closed on the first one.
There is a potential danger when using synchronization: If you update a file before your cloud service has sent you the latest version, you can end up with collisions or version conflicts. Most cloud storage services will flag conflicts with file name or extension changes, but untangling conflicting files is never fun. Files accessed directly from cloud-based services, like Google Docs, don't suffer from this problem, since changes are made directly on the Web version of the file.
Just to be clear: I can store any file? Any folder?
Yes. Within file size and space limits, anything you can store on your hard drive can also be stored in a cloud drive.
You can also move entire folders in your Google Drive.
What you can't do with Google Drive -- that you can with some other services -- is sync files or folders in place. With Google Drive, if you want to sync a file that's buried in a folder on your hard drive but you don't want to move it to your Google Drive, you can't. You have to drag it to the Google Drive.
I keep hearing about Dropbox. Is it the same thing?
Dropbox is the tech elite's favored sync and store product. Google Drive is a big threat to Dropbox, but if you like both, use both.
Tell me more about sharing with a cloud drive.
E-mailing files around for review among coworkers is the old way to share data, but with cloud storage, now all you have to do is email a link to a file stored on your Drive. All the services let you mark a file or folder for sharing and then invite people to view or download it.
However, if you're going to be asking people to comment on or update a file, you can run into versioning problems. You don't want people working on the file at the same time. In-place online editing products like Google Docs are better for real-time collaboration.
Can Google Drive be used as a backup service?
If you're going to use a cloud drive for backup, you need to be sure that it does more than just act as a virtual hard drive. Backup systems have to keep files that you mistakenly delete; you might want to be sure they keep older versions of your files as well.
Google Drive does keep versions of files going back 30 days (more if you get into preferences) and keeps a trash folder for deleted files. So it can be used for backing up data. It's not a full all-system backup solution like Time Machine, but it's actually more forgiving of user error when it comes to file storage than the file systems built in to Windows or OS X.