I just started learning Ruby on rails and I was wondering what Heroku really is? I know that its a cloud that helps us to avoid using servers? When do we actually use it?
Heroku is a cloud platform as a service. That means you do not have to worry about infrastructure; you just focus on your application.
In addition to what Jonny said, there are a few features of Heroku:
Heroku provides very well written tutorial which allows you to start in minutes. Also they provide first 750 computation hours free of charge which means you can have one processes (aka Dyno) at no cost. Also performance is very good e.g. simple web application written in node.js can handle around 60 - 70 requests per second.
Heroku competitors are: