Horizontal vs. Vertical Scaling
Vertical scaling means increasing the resources of a specific node. For example, you might add additional memory to a server to improve its ability to handle load changes.
Horizontal scaling means increasing the number of nodes. For example, you might add additional servers (load balancer), thus decreasing the load on any one server.
Vertical scaling is generally easier than horizontal scaling, but it's limited. You can only add so much memory or disk space.
Limitations
Vertical scaling can essentially resize your server with no change to your code. It is the ability to increase the capacity of existing hardware or software by adding resources. Vertical scaling is limited by the fact that you can only get as big as the size of the server.
Horizontal scaling affords the ability to scale wider to deal with traffic. It is the ability to connect multiple hardware or software entities, such as servers, so that they work as a single logical unit. This kind of scale cannot be implemented at a moment’s notice.
Example
Imagine, if you will, an apartment building that has many rooms and floors where people move in and out all the time. In this apartment building, 200 spaces are available but not all are taken at one time. So, in a sense, the apartment scales vertically as more people come and there are rooms to accommodate them. As long as the 200-space capacity is not exceeded, life is good.
This could even apply to a restaurant. You have seen the signs that tell you how many people could be held in the establishment. As more patrons come in more tables may be set up and more chairs added (scaling vertically). However when capacity is reached no more patrons would be able to fit. You can only be as big as the building and patio of the restaurant. This is much like in your cloud environment, where you could add more hardware to the existing machine (RAM and hard drive space) but you are limited to capacity of your actual machine.
On the horizontal scaling side, imagine a two lane expressway. The expressway is good to handle the 2,000 or so vehicles that travel the expressway. As commerce begins to expand, more buildings are constructed and more homes are built. As a result the expressway that once handled 2,000 or so vehicles is now having an increase to 8,000 vehicles. This makes a major traffic jam during rush hour. To alleviate this problem of traffic jams and an increase in accidents, the expressway can be scaled horizontally by constructing more lanes and quite possibly adding an overpass. In this example the construction will take some time. Much like scaling your cloud horizontally, you add additional machines to your environment (scaling wider). This requires planning and making sure you have resources available as well as making sure your architecture can handle the scalability.