In cloud computing, what does the term 'multitenancy' refer to?

The term 'multitenancy' in cloud computing refers to a single software instance serving multiple users simultaneously. This architectural approach allows multiple tenants—each representing a different user or organization—to share the same application resources while keeping their data and configurations separate.

This model brings several advantages, such as cost efficiency, as the maintenance and operational costs are reduced since a single instance of the software does not need to be replicated for each user. Additionally, resources can be optimized and scaled more effectively, allowing for better overall performance and resource management. In a multitenant environment, updates and features can be rolled out to all users at once, simplifying maintenance and providing all users with the latest enhancements and security patches without requiring individual installations.

This contrasts with the other options, where separate instances would lead to higher costs and more complex resource management, while exclusive access for paying customers is not the defining characteristic of multitenancy.