In cloud computing, Event-Driven Architecture (EDA) is a design paradigm in which software components perform actions (known as "services") in response to receiving certain types of events. This model allows for highly decoupled, scalable and flexible systems that can respond in real-time to business events.

Event-Driven Architecture works by defining a system's behavior based on how it should respond to different types of events. Events are generated by software components when a significant change in state occurs, and other components listen for these events and react with appropriate services.

An online retailer uses an event-driven architecture to handle orders. When a customer places an order (an event), it triggers services such as updating the inventory, processing the payment, and scheduling the delivery.