Water in the air can be in the form of vapor (gaseous), rain, mist, cloud (liquid) or even as snow (solid). This water comes from lakes, rivers, oceans and other sources. The amount of water in a vapor in the air varies from place to place and from season to season. It is also more near the earth and does not exist if we go above the lowermost layer of the atmosphere, the troposphere.
Image Source: watersaving.com/media/filer_public/2013/11/28/water-cycle-1.jpg
Although water vapor only forms 3 to 4 percent of air at a place, it plays a very significant role in regulating the air temperature, formation of clouds and day to day changes in weather.
How does water change from liquid to gaseous from? Insolation heats the surface of water, causing a part of the water to change into steam that rises up into the air as vapor. This process of water changing into vapor on heating is called evaporation. Evaporation takes place all the time and at all temperatures It is, however, highest in hot, dry and windy conditions. Also, the larger the area of water surface the greater is the evaporation.