A cluster is a group of computers organized together to perform the same set of functions. For instance, you may have a cluster running your database software. Or you can have a cluster running your corporate e-mail server software.
A grid is a collection of resources. A grid can be composed of multiple clusters. In Oracle's grid world, you can have a cluster of servers running the database software and a cluster of servers running the Application Server software. Since they are all in the grid, you can move resources from one cluster to another should demands dictate.
This was first published in December 2005