Syncing to the cloud just synchronises your personal settings and saves with Steam's online storage. It's handy in case you lose the data on your PC or if you have another pc somewhere else and you want to have the same game settings on that one too.
I turned my cloud sync off because sometimes after a crash when the game didn't shut down properly the synchronisation would get out of whack and it would overwrite all my key configurations with the default ones. After the second time of this happening I turned the bloody thing off.
It won't affect updates etc or anything else. You can still go and purposely delete or destroy your game files, then go into steam and select "verify cache" and it will restore the missing files.
The only time I would turn it back on is if I was doing a fresh install on my system, I'd use it to back everything up before formatting.
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