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Cloud migration involves the process of moving data, applications, and services from on-premises infrastructure to a cloud computing environment. This transition is critical for organizations seeking to leverage cloud technology for enhanced scalability, flexibility, and cost-efficiency.

The correct answer emphasizes the comprehensive nature of cloud migration, as it is not limited to just data transfer. It includes applications and services, thereby addressing the full scope of resources that an organization might require to function effectively in a cloud environment. By migrating these components, businesses can optimize performance, improve collaboration, and benefit from the innovative capabilities offered by cloud solutions.

In contrast, the other choices represent narrower activities that do not encapsulate the concept of cloud migration. Transferring data from one local server to another or creating backups of local data only pertains to local storage management. Updating software on a local machine also falls outside the parameters of cloud migration, which focuses on transitioning to cloud infrastructure rather than managing existing local resources.