The term "scalable architecture" in cloud systems implies the ability of a system to expand and adapt based on increased demand. Scalable cloud architecture can handle varying workloads by allocating resources dynamically, such as processing power, storage capacity, or bandwidth. This flexibility ensures that the system performs efficiently during peak usage times without unnecessary overprovisioning. A scalable architecture is essential for businesses as it allows them to grow without significant disruptions or costs, ultimately leading to improved performance and better user experiences during fluctuations in demand.