What determines how much water vapor a gas can hold?

Temperature - Warming the gas increases its capacity to hold water vapor, cooling it reduces its capacity to hold vapor.

Dewpoint - This is the temperature where a gas is 100% Relative Humidity (full of water vapor). If a gas cools below this temperature, water vapor is lost as condensation.

This is what happens when condensation forms on a bathroom mirror after taking a shower or bath. The warm bathroom air is full of water vapor. As the air touches the cool surface of the mirror, the air is cooled and its capacity to carry water vapor reduces. The excess water vapor then condenses to liquid water on the mirror surface.

Clinical Examples:
The gas within a humidified breathing circuit is warmer and holds more vapor than the surrounding air. Unless the humidified gas is kept above its dewpoint by using a heated wire breathing circuit, the gas will cool and the water vapor will be lost as condensation.

How does humidification normally occur in the neonatal airway?
How does humidification normally occur in the adult airway?