A scalable application in cloud computing is one that can efficiently handle increased workloads by expanding its resources without a significant drop in performance. Scalability can be vertical, where resources are added to existing machines, or horizontal, which involves adding more machines or instances to the pool. This flexibility allows applications to accommodate growth in user demand or data processing needs dynamically. Scalability is essential for cloud services, enabling businesses to reduce costs during low usage periods while ensuring high availability and performance during peak times.