Next, you can decide whether, or how, you'd like to use iCloud.
There are two options: for data and apps, and for backup.The first option allows you to enable iCloud generally. Doing so lets you use iTunes and Documents in the Cloud, share photos online via PhotoStream, redownload iTunes purchases among others, and--if you sign up for it--use iTunes Match. Generally speaking I recommend that you enable iCloud, even if you don't use most of its features. Since it's a free service, and has some valuable features, there's not much downside.
Once you've enabled iCloud, you'll need to decide whether you want to back up your data to your computer or to iCloud. If you choose your computer, this will back your phone's data--apps, settings, etc.--up to your computer every time you sync it.
If you choose iCloud, your phone's data will be backed up to iCloud every day via Wi-Fi.
Make your choice and tap the Next button in the top right.