The words for the cloud can be entered manually, or taken from a webpage (I used our own front page, as you can probably see). While editing the cloud, it's rendered in Silverlight and each word "pops up" when you hover over it, so you can easily read it. But the end product is just a visually appealing mass (or mess) of words, with no functionality.
I tried the site using as the source for the words in the cloud. Here are some of the results:

[My username is in there somewhere]

Not sure what use it might be apart from making a somewhat decorative arrangement of words which appear on a webpage.

Changeable options include: Shape, aspect ratio and options to include/omit words.

Link: Tagxedo - Tag Cloud with Styles