Cumulus clouds are the cotton ball-like poofy clouds. They can be tiny, as in a size that would fit in your living room, or 30,000 feet high and several hundred miles long. There are several different types of cumulus clouds. Strait cumulus are the mid- to low-altitude ones that aren't smeared into each other too much (most of the time there is definite space between each individual cloud)- they look like homemade biscuts, and have flat bottoms.
There are also:
Cumulus clouds form when warm, moist air rises (because the air above it is cooler - this situation can be caused by all kinds of heating and cooling), cools (because it is decompressing), and starts condensing moisture. Sometimes, if there is a low-level temperature inversion, this will prevent the clouds from building beyond a certain height. A cumulus cloud with well-defined, crisp edges on the top is still building and "active"; one with fuzzy top edges is starting to dissapate.
If conditions are right, cumulus clouds can become so big that the water droplets in them continue to grow (by smacking into other droplets), and eventually they get too heavy for the updrafts in the cloud to support them - presto, you have rain out of a cumulus cloud, which is now a cumulonimbus. Cumulonimbus clouds range in intensity from the ones that produce little rain showers to the rotating mesocyclone thunderstorms that produce F6 tornados and grapefruit-sized hail.