How can a cloud be created from virtualization or how is it different from virtualization?

view story

http://serverfault.com – I have heard that virtualization is the basis of Cloud,so If i have a machine with xen as virtualizing environment and many vms running on it,then can that be called as a cloud. Is it true that vms that scale based on load and memory is called cloud and vms that do not scale is called as just virtualization! How can a vm scale??Based on my understanding for xen once we fix cpu and ram,it cant go beyond that (am aware of Dynamic memory Management) so how it really scale?.Can any one please clarify this (HowTos)