I don't understand this bloody iCloud program?

I have the 32 GB iPod 5th generation. Today I tried to download a 923 MB app free from the App Store. It would not download the app and responded with this message: "There's not enough available storage to download 'Beethoven's 9th Symphony for iPhone.' You can manage your storage in settings." So I followed the given direction and managed my storage in settings… Or at least I attempted to. I first turned off individual apps from backing up to iCloud. This did not help. I then turned off iCloud (I did not delete my iCloud account). The same message still appeared when I attempted to download the app. I thought about deleting my iCloud account, but I have no idea what iCloud even does. Someone please tell me how to fix this problem.

There's not enough available storage space ON YOUR iPOD.

Apps don't download to iCloud, that's dumb. Apps are already stored on Apple's Server. Your iPod is the one that has limited space. Go delete some music/videos/pictures/apps you no longer use to free up the space on your iPod.