SaaS stands for Software as a Service, and it differs from traditional software in that it is hosted on the cloud and accessed via the internet rather than being installed locally. This model allows users to utilize applications without extensive infrastructure investment, promoting scalability and flexibility. SaaS providers manage all software updates, maintenance, and support, enabling users to focus on their core business activities. Subscription pricing typically covers the ongoing service, making SaaS an appealing option for businesses seeking cost-effective solutions.