Cloud iridescence is a colorful optical phenomenon that occurs in a cloud and appears in the general proximity of the Sun or Moon. ... Iridescent clouds are a diffraction phenomenon caused by small water droplets or small ice crystals individually scattering light.
Rainbow clouds are not just normal clouds that you see every day in the sky. These clouds have the shape and look of normal clouds, but due to the sun falling behind them, they have the colors of a rainbow within them. That is why they are known as rainbow clouds; because they have the colors of a rainbow. So, when you see these rainbow clouds, you see a rainbow in them as well.
Rain clouds, storm clouds, sunset clouds--all are spectacular in formation and color.