Gaseous water in the atmosphere is known as humidity. The amount of water that the atmosphere can hold is a function of the temperature. Hot air can hold a lot more water than cold air. I like to think of this as the air being a giant sponge. When the air is cold, the sponge is smaller, so it cannot hold as much water as when it is hot, and the sponge is larger. So for example, San Francisco and Chicago in the summer may both have 90% humidity... but Chicago will feel a lot more icky (a good technical term to describe high humidity!). This is because San Francisco is 60 degrees F, while Chicago is 95 degrees F -- so there is a lot more water in the air in Chicago. The temperature at which air is saturated with water is the dew-point. The dew-point in warm air is much higher than the dew-point in cold air.
One way of monitoring atmospheric moisture is with satellites. The GOES satellite allows you to view the current water vapor in the atmosphere. The GOES satellite captured a set of time-lapse images which documented a plume of water vapor from the great lakes.
Clouds and fog are different from humidity. Clouds are formed when air becomes saturated with water vapor and moisture droplets form. Moisture droplets are very small (about 0.002 cm) and they can either be liquid or solid (ice). Fog is simply a cloud which forms at the ground. Fog forms when the air temperature and the dew point are nearly identical. Because the atmosphere can hold so much water at high temperatures, we usually only see fog in cool, moist environments.
San Francisco is an excellent example of a prime environment for fog. Warm air blowing off of land collides with cool air from the ocean. The air is quickly cooled and brought to its dew-point, causing a type of fog called advection fog. The warmer the air blowing off the land is, the more likely, and more severe, the advection fog is likely to be in San Francisco. That is why the fog in San Francisco is usually the worst in the summer when the inland areas heat up.
If you have ever driven through the Great Central Valley on your way to go skiing in the winter, you may have encountered the severe valley ground fog known locally as Tule fog. This is more generally known as radiation fog. Radiation fog forms when radiative cooling of the ground chills the air directly over it, brining it to the dew point. The Great Central Valley is prone to this type of fog because moist air is blown into the valley through the San Francisco Bay delta and then chilled by the ground overnight.