The acronym 'IaaS' stands for Infrastructure as a Service in cloud service models. IaaS provides virtualized computing resources over the internet, allowing organizations to rent IT infrastructure, such as servers, storage, and networking. This model offers scalability, cost-effectiveness, and flexibility, enabling businesses to quickly respond to changing demands without heavy upfront investments in physical hardware. By utilizing IaaS, companies can focus on their core operations while relying on cloud providers to manage the underlying infrastructure.