As its name implies, it is mining in the cloud. You basically buy or rent hashrate, usually from other people or a mining farm that the company owns.
Although minergate's cloud mining seems legit and profitable, I don't think it will stay that way for long due to the increases in difficulty. You'd probably make more money by buying the hardware yourself or simply holding Bitcoins for the amount of time it'd take you to break even.
For beginners what would you advice?
Are you actually wanted to mine altcoins? cloud mining is not really profitable and mostly they are scammer..
So i suggest to stay away to them not a good idea to invest from them if you really wanted to mine buy your own rig or build your own..
And mine altcoin using nicehash to easily setup and start mining..
There are lots of members who join here are already experience to invest in cloud mining and almost all are never get back their bitcoins ..