Sync does indeed store the data you choose to Sync in the cloud.

Because you need to retain a lengthy unique code in order to recover that data from a different installation of Firefox, many users find it not to be a good method of backup because that Recovery Key was lost in a hard drive crash or reformat. Make sure you store the key in a safe location outside of your computer along with your username and password.

If you end up choosing to use a different cloud backup service such as Crashplan or Carbonite, you can point it to your bookmarkbackups folder so you have a number of files for potential recovery. To get the full path to that hidden folder, the easiest way is to access it from within Firefox.

You can open your current Firefox settings (AKA Firefox profile) folder using

Help > Troubleshooting Information > "Show Folder" button

Double-click bookmarkbackups. You should see numerous files that are date and time coded. You can click after the folder name in the address bar to select and copy the path. (This is based on Windows 7, but I assume Windows 8.1 is similar from the desktop side.)

There is a new version of Sync being developed that is available in current Firefox 29 and 30 alpha builds that doesn't use a locally stored Sync key and that is better suitable for storing data in the cloud.

• https://blog.mozilla.org/services/2014/02/07/a-better-firefox-sync/

For now, it seems like the best way to store Firefox bookmarks in the cloud is to use a service like Dropbox.