I can understand the initial bit of all user contacts taken to the cloud and then matched against the Whatsapp global user list. But later when user adds more contacts in phonebook, it shows up in Whatsapp contacts in just a few seconds without any manual syncing button. Is it possible to keep passing the data from phone contacts to the cloud?
There is a background process running in OS, with is associated with whatsapp.
When you install whatsapp it will add it's account in your OS settings (You can check by going in ,Settings > Accounts ) that will allow it to use it's SyncAdaper, which can periodically sync data from app to server, in this case whenever a new contact is added in your phone, or after some fixed iterative time defined by OS, All SyncAdapters are called upon to sync data with associated server, in this case whatsapp app to whatsapp server.(Google Mail / Contacts works similarly - autonomous)
So next time when you open app, you find your new contacts listed in whatsapp..