Since Nephele is a cloud service, does that mean it is suitable only for cloud applications and services?

Not at all – it only means that your installed applications (or web browser, if performing offline activations) connect to Nephele over the Internet for activation and deactivation of licenses. It so happens that Nephele is a perfect fit for license-enabling cloud services owing to its Internet-centricity and scalability and good citizenship in a cloud-based ecosystem.