Condensation is the process of water changing from a vapor to a liquid. Water vapor in the air rises mostly by convection. This means that warm, humid air will rise, while cooler air will flow downward. As the warmer air rises, the water vapor will lose energy, causing its temperature to drop. The water vapor then has a change of state into liquid or ice.
You can see condensation in action whenever you take a cold soda from the refrigerator and set it in a room. Notice how the outside of the soda can "sweats?" The water doesn't come from inside the can, it comes from the water vapor in the air. As the air cools around the can water droplets form.