In cloud computing, Fault Tolerance refers to the ability of a system to continue functioning even when part of it fails. This is achieved by designing the system in such a way that the failure of a single component does not impact the overall performance of the system.

Fault Tolerance works by incorporating redundancy into the system. This can be achieved through various methods such as replication (having multiple copies of the same data), distribution (spreading the data across different locations), or diversification (using different types of components that perform the same function).

Consider a cloud-based e-commerce website that uses multiple servers to handle customer requests. If one server fails, the system automatically redirects the traffic to the other servers, ensuring that the website remains available to customers. This means even during a server failure, customers can still shop on the website, ensuring continuous business operations and customer satisfaction.