The problem with dividing the atmosphere into lots of little cubes is that there are many processes that are smaller than the cubes. So, for example, individual clouds may well be smaller than a grid box. They do still play an important role in the climate system, especially collectively, so somehow the processes that form them and the consequences of them existing must be represented.
So, for example, based on knowledge of the temperature and humidity in a box, we must estimate how much cloud and how much rain there is in the box. We also need to know how much dust (i.e. ‘aerosol’) is in the box, as raindrops require a very small solid particle in the air to form on. This process is called parameterizing.
There are many parameterization schemes in the model, such as the scheme which calculates how much cloud there is. Some of these schemes are believed to be quite reliable, but others are far less well understood and we’re not very sure about them.