By analyzing aircraft measurements of individual drop sizes in clouds, it has been shown in a companion paper that the probability of finding a drop of radius r at a linear scale l decreases as lD(r), where 0 Յ D(r) Յ 1. This paper shows striking examples of the spatial distribution of large cloud drops using models that simulate the observed power laws. In contrast to currently used models that assume homogeneity and a Poisson distribution of cloud drops, these models illustrate strong drop clustering, especially with larger drops. The degree of clustering is determined by the observed exponents D(r). The strong clustering of large drops arises naturally from the observed power-law statistics. This clustering has vital consequences for rain physics, including how fast rain can form. For radiative transfer theory, clustering of large drops enhances their impact on the cloud optical path. The clustering phenomenon also helps explain why remotely sensed cloud drop size is generally larger than that measured in situ.