A Cloud doesn't necessarily 'hold' water...a cloud often 'IS' water. As
I said earlier, there is water vapor (gas state) in our air at all times, but the amount of water that exist in our air in the gas state has a limit. When that limit is reached, it's called 'saturation'...Without actually thinking about how a sponge holds water (because a cloud isn't exactly the same as that)...think about the condition where a sponge is so full it can't sop up any more water. At the saturation point of air, clouds will form with increasing water (through 'condensation'). Now, once the cloud has formed and developed, there's often some dust or particle or something floating around in the cloud along with the water. Often these will attract all sorts of droplets to it, creating a raindrop. Or, a frozen ice crystal created in the cold parts of the cloud will fall through the cloud, accumulating water (or more ice) onto it as it falls. Eventually, the droplet (or ice crystal) will fall out of the cloud, headed for the ground (kind of like a conveyor belt). The cloud often has that moisture replenished by more water vapor being sent into the cloud from the surroundings (which is often why big thunderstorms have nice blue sky all around them-- that's where it's stealing all the invisible water vapor from).