An Apple ID is the email address you use as a login for just about everything you do with Apple, including using iCloud to store your content, buying songs from the iTunes Store, and downloading apps from the App Store.
When you set up your iPhone, iPad, or iPod touch, you can use the same Apple ID for iCloud services and purchases on the iTunes Store, App Store, and iBooks Store. You can also use one Apple ID for iCloud services and another Apple ID for store purchases (including iTunes in the Cloud and iTunes Match). You will get all the benefits of iCloud whether you use the same Apple ID for iCloud and store purchases, or different IDs for each.
The following section explains these two approaches.