Fractal clouds are created in much of the same way as fractal islands. You can use either fBm or the mid-point displacement method. Either method works fine. Instead of creating a 3D island, you instead create a texture map based on the height of the points. You select a certain height to be considered "sea level" and any value that is below that value will be considered to be part of the sky and not the cloud. Using these methods you can get some very realistic results. Note: Using these methods only gives you 2D clouds. There are other methods available to create 3D clouds, but I will not go into those. The cloud displayed below was created using the fBm method.