Condensation and Evaporation are processes that occur constantly in the atmosphere, and even if you can't see the effects of it, know that it's there. Water molecules are constantly escaping to the gas state (evaporation) or colliding and collecting to liquid form. Most condensation, which is the cornerstone for cloud development and precipitation, occurs when the air is saturated (relative humidities of 100%).
    One of the first readily noticeable examples of condensation is after a clear calm  night where the air temperature cools to the temperature of the dewpoint. Objects with good heat conduction can actually cool just a bit further, resulting in a situation where a certain surface is actually colder than the dewpoint. Water molecules would then condense onto this surface (localized air at this point is said to be "Super-Saturated"). The morning dew on blades of grass is obviously the prime example of a condition that bears its name.
    There are a few other forms of condensate that we could observe on the ground. "Frozen" dew is a situation that occurs when the air temperature cools to the dewpoint above freezing, and then the two in tandem cool a bit further. This would maintain the conditions necessary for dew formation, but being now below freezing would turn the previously liquid dew into small drops of ice.
    In cold weather situations, it is often that the "Frost Point" would be slightly warmer than the "Dewpoint". This is because at temperatures below freezing, the saturation vapor pressure is lower with respect to ice than water. When air becomes supersaturated with respect to the frost point, water molecules would change right from a gas state directly to that of a solid, in a process previously noted called "Deposition". This is the frost that we see some mornings that have a wintry chill.
    In the above processes, note that all of them required a surface to condense onto. But what happens in the atmosphere, where condensation is rampant, and clouds are visible? There are apparently no surfaces for them to collect onto, right? Obviously wrong, and it's a good thing too.

Praise Be to the Dirty Air

    On the average day, a column of air only a few cubic inches thick contains anywhere between 1000 and 150,000 items that aren't listed in the gaseous ingredients of the atmosphere. These particles are quite small and originate from dust, volcanoes, factory smoke, car emissions, forest fires, blowing sand, and...well... you get the picture. These tiny particles allow for water molecules to condense, providing a contact surface and maintaining conditions necessary for mass condensation without requiring nearly unachievable humidities of several hundred percent. For our purposes, these particles shall be called Condensation Nuclei, because they allow for good condensation, and obviously they'd be at the center of whatever liquid were to collect. You can readily see some of these particles on the afternoon of a clear day by staring off into the distance. The farther you look out, the less of a contrast there becomes between the sky and the ground. That is because you are viewing the scene through more and more particles in the air and the distance you are able to directly view an object without light reflecting off one of these tiny things is diminished. Sometimes this creates somewhat of a blue haze on distant hills and mountains.
    These particles are very small, much smaller than the human eye can see, say .000002 meters in radius, more or less. Some love water vapor ("hygroscopic") and invite condensate even if humidities aren't at 100%. Others aren't very appreciative of water contact ("hygrophobic"), and it takes highly super-saturated conditions to get them to cooperate.

    On the way to cloud formation, there are a few other stages visible condensate can exist is the sky. Haze would be the first one, where particles in the atmosphere that enjoy condensation would begin attracting water molecules at humidities less than 100%. These new droplets of water are unorganized yet can be numerous enough in the sky to turn it to a milky hue, as sunlight has more difficulty penetrating it. As the humidity rises to around 100%, more and more water vapor molecules are condensing, and more and more particles in the atmosphere are availing themselves. The droplets get larger, and obstruct more sunlight, reducing visibility. Whenever the visibility drops below a certain point, usually one mile, the mass of water droplets is called Fog. Fog is just a large mass of condensed water vapor that exists because of the relative humiditiy of the local environment. Calm winds would continue to permit fog to remain, as would absence of sunlight. Wind and sunshine can help 'mix' the air, allowing for either a greater water capacity with higher temperature, or by lessening the amount of water vapor present and moving it somewhere else. This would effectively dissipate the fog. A fog that persists for long periods of time can eventually be a health hazard, as the nuclei on which water vapor has condensed could be acidic or otherwise harmful. This is in addition to the obvious problem of low visibility.

Clouds

    Super-saturated conditions exist all the time in the sky, because they provide the catalyst for cloud formation. Air parcels that have humidities of 100% are lifted upward a little further, forcing them to cool a little more. Water vapor in that parcel darts for the nearest condensation nuclei, collide with one another and coalesce, or in colder cloud temperatures ice crystals can make contact with each other and solidify.
    Turbulent air motions keep clouds forming larger and larger, and also concentrate water molecules in the vicinity of the cloud, and drier elsewhere. They can stay quite thin or grow to heights of 60,000 feet while simultaneously creeping near the ground.
    Even though every star in the entire celestial globe was named, dated, and had time honored mystical bed-times stories by about 2000 years ago, no one really decided to mess with the clouds until the 19th century. Then, all of a sudden, people tried to name and classify the clouds and it became a race for public acceptance. A Frenchman came up with a system that wasn't popular, but about a year later an Englishman drew something up to widespread acceptance. Others then modified it and expanded it, and to this day still maintains the basic groups founded upon 4 basic Latin words: Stratus (Latin for "layer"), Cumulus (Latin for "heap"), Cirrus (Latin for "curl of hair"), and Nimbus (Latin for "violent rain"). These names were used to show thin clouds, wispy clouds, puffy clouds, and rain clouds, respectively. These words can be used together to define, for example, a puffy rain cloud, etc. There are ten main types of clouds, divided up by proportionate elevation they are perceived at.

High Clouds

    High clouds are almost exclusively composed of ice crystals and appear rather thin, because there's not much more development possible vertically in a cloud that shows up that high.

Cirrus	Cirrocumulus	Cirrostratus

    Cirrus clouds are the thin wispy, brushstroke-like clouds you see highest up on a given day. They are usually associated with fair weather, because obviously you need to stare through most of the lower atmosphere to see them. Cirrocumulus clouds look like tiny patchwork high in the sky. They've often been describe as appearing like the side of a fish, hence the term "Mackerel Sky". Neither one of these two cloud types usually cover the entire sky. Cirrostratus on the other hand, often does, and it's milky hue and bountiful ice crystals are often responsible for playing with sunlight to create some interesting optical phenomena.

Middle Clouds

    Middle clouds are composed of water droplets and, when temperatures permit, ice crystals. Unlike most high clouds, they can bring precipitation

Altocumulus	Altostratus

    Altocumulus clouds are perhaps the most common and shows up in the most diverse appearances (perhaps the cumulus as well). They can appear in single or multiple levels, and can either appear somewhat puffy, or even lined up in waves depending upon the winds at that level. They are great indicators of weather conditions at that level as they act like tiny checkpoints for vertical air motion, horizontal air motion, water vapor presence, etc. Altostratus is never white, and often dirty looking. It can often cover the entire sky and still be thin enough to expose sunlight. One way to distinguish altostratus from cirrostratus is to look for the presence of shadows (not usually permitted by altostratus). Altostratus is also almost exclusively comprised of water droplets, while cirrostratus is almost entirely ice crystals.

Low Clouds

    Low clouds are often sloppy looking because of the interaction with friction on the ground, and because they are often spun off from more organized storm clouds. Yet they too can produce precipitation.

Nimbostratus	Stratocumulus	Sratus

    Nimbostratus are often very dark, obscuring clouds that move quite rapidly with wind. It is sometimes confused with altostratus, but with this cloud sunlight can't penetrate it and you can't easily verify the base of the cloud. These clouds often bring with it low visibility, due to the rain that usually forms beneath it and perhaps fog layers that develop as well. Stratocumulus are good weather analyzers, similarly to altocumulus. They can form in layers, patches, or waves. They can usually be seen at sunset or sunrise as the sun breaks through them in little cracks. They differ from altocumulus because they are lower in height and have larger cloud components. Because they aren't particularly thick either, they rarely bring forth precipitation. Stratus is pretty close to the color of 'miserable'. It's the sky-covering low dark grayish mess that resembles fog but doesn't reach the ground. Sometimes annoying misty drizzle will fall from these clouds, and they will linger around for a long time. Their chief identifiers are the low, flat base, and their darker gray color.

Cross-Layer Clouds

    Also known as "Clouds with vertical development", these clouds may begin at a low height level, and then develop across the mid levels of the sky. You can often see them appear with other cloud types and can easily distinguish the vertical development. They're not always associated with stormy weather, but you can bet all big storms have these in them.

Cumulus	Cumulonimbus

    Cumulus clouds are perhaps the most familiar clouds, and the most amusing to look at. They are puffy and look like multiple cotton balls shoved together. They are the ones people relaxing under shade try to associate with other shapes. They differ from stratocumulus because there's often lots of sky and space between each one, and cumulus clouds obviously have a bit more vertical development. Often the vertical heights these clouds grow to are dependent upon conditions of the atmosphere, and therefore can be used to 'tell the weather'. Cumulus with limited vertical development are often called 'fair weather clouds' for their inability to grow to vast heights, and therefore limited convection will take place that day. Cumulonimbus, on the other hand, can have their base in the lowest level of clouds, and grow large enough vertically to reach the top of the troposphere. These clouds can move tremendous amounts of energy and precipitation, and often don't need explaining. If you've heard of a tornado, or hailstorm, or any thunderstorm, a cumulonimbus cloud was involved. Though often by themselves, cumulonimbus clouds can form in a line, resulting in severe weather across a wide swath.

Unusual Clouds

    Then there are some clouds that don't fit any of the above cloud types, and it is for specific reasons. These clouds are very good at describing a specific weather phenomenon, so they're always useful to the trained eye. They also are quite interesting to look at.

    Lenticular clouds are from the family of altocumulus, but they form because of fast air movement over rugged terrain. You will see these form and change shape rapidly along mountain ridges. They've often been mistaken for UFO's and other such phenomena. Pileus clouds is basically less of a cloud than perhaps the froth of moisture thrown upward above the top of a developing cumulonimbus cloud. It naturally condenses into a cloud appearance, but is always looked for to indicate which thunderstorm is growing more healthily. Mammatus clouds are always the 'bad news' clouds, being the only clouds that can form in sinking air. Since most clouds need rising air to develop, the fact that sinking air can form a cloud usually means there's something bad about to happen. They're usually found undulating underneath a cumulonimbus cloud (hence their "udderiffic" reference), and anytime you see them if you're outside, heading inside is a good idea.

Stability

    Once we have moisture that is condensed enough to form a cloud, or perhaps water vapor that exists in a saturated state, we then have to start talking about Stability of the atmosphere to know whether or not a large cloud will form, or perhaps if any clouds will dissipate. Clouds do not form on all days in all places, and every cumulus cloud does not form into cumulonimbus thunderstorms. Recall that when an air parcel is warmer than the surrounding air, it will rise. Also remember that when an air parcel rises it expands and cools, but maintains the same water content it had before. Cooler air has a lesser water vapor capacity, and thus rising air will gradually saturate as it cools. Whenever an air parcel no longer is warmer than its surroundings, it will stay in place at equilibrium, or sink (warm) to where it will be. Saturated air will also rise, but, entering a condition whereby it's moisture content exceeds its capacity (notice the now loosely used term 'capacity'), continuing to do so would result in cloud formation through the layer of air it rises.
    The relationship an air parcel has to the surrounding air is the basis for stability. There are atmospheric conditions such that a parcel, when nudged vertically, will continue to rise a long way and thus it is easier to form a cloud. Likewise there are conditions where air could be elevated vertically but still suffer no chance of developing a cloud. When atmospheric conditions greatly enable cloud development, it is said to be Unstable. Air that is Stable inhibits cloud formation. Consider the diagram on the left. When the ball is pushed uphill, it will continually be brought back down, but if the ball on the right is pushed downhill, it immediately takes off, moving far away from where it originally was, even though the first position was a stable point.
    Stability can vary between atmospheric levels, and change during time of day. Air can be de-stabilized as well as stabilized. Air can also even be stable when unsaturated and unstable when saturated. Cold air is mostly a stabilizing force, and can be seen to work on the atmosphere after sunset, when blown into a region, or even a cold surface over which air is blown. Fog can form in stable air, and the increased stability is often responsible for fog to persist (nothing can come in and break it up). A sinking layer of air is also a stabilizing force, thus a region of relatively high pressure would carry with it fairer weather. De-stabilizing events usually involve heating. Daytime heating of the ground, warm air moving into a region, or even air blown over a warm surface can create instability. Since temperature normally decreases with altitude, there is usually some level where the atmosphere is unstable, hence, there are usually some clouds around. But there are also some conditions where temperatures actually increase with height, which is called an Inversion. An inversion is a solid stable layer that can last for a long time and can prevent air from circulating with the air above it. This can enable persistent fog or hazardous air stagnation. During complex storm systems, air at differing heights can have several different stability levels.
    Air doesn't always need to be heated or cooled by sunshine (or absence thereof) to change its stability. Vertical air motion can also be forced by an immovable object. Horizontally blow air will have to rise when faced with a mountain. This air will cool, even though the air around it may already be as cool. Likewise it will keep its water content constant, and thus raise its relative humidity to the point of saturation and then cloud development. Mountain ranges that are perpendicular to the average wind flow will receive many times more precipitation on the upslope side than the downsloping side. This is because the reverse case is true with air being blown down a mountain. It has a warming effect and also enhances stability.
    Stability can change clouds from one type to another. Altostratus can change to altocumulus if the top of the cloud deck cools while the bottom warms. Looking at flat cloud bases can give a good indication of where the air below it is stable for unsaturated air (this is also called "well mixed") and the cloud above it represents the elevated saturated air parcels. The heating of the sun and ground, as well as the blowing of warmer or cooler air, combined with the effects of the terrain, all combine to produce many different clouds at different levels, and to keep other levels clear, all the while changing during the day. Each cloud tells a story of stability and moisture, and can give a good indication of what may follow.