Clouds, aka. Sky is a dimension where you can go to using the magic bean.
The magic bean is obtained from completing a quest called Colors Of The Sea, which you can start by talking to Cupcake Crab. You need to get 4 out of the 7 shells, (red, blue, gold, green, purple, white, black). After completing the quest, Cupcake Crab gives you a magic bean, which can be used to plant a beanstalk- a portal to the clouds dimension.
The clouds consists of 2 platforms, One being solid, (the white clouds) and One being empty, which you can fall through, (the blue sky). The way to go from island to island is paths, such as dirt, stone, bricks, and gold. You can place objects in the blue part too. like caves, you cannot place certain items in the clouds.
Angel is an only creature that spawns on Clouds dimension.