Water vapor is suspended in the air. Warm air can hold more water in it than cool air, so as the air cools it allows water to condense into small droplets of water which manifest as a thin mist or cloud. Water in vapor form is transparent and invisible to the naked eye.
Obviously once those tiny droplets start to collect together they cannot stay airborne for the time it would take a huge cloud to get all the water together to form one big droplet, so once they reach a critical size they fall. Also remember that cooler air can hold less water in it, not no water, and it takes time for the air to change temperature. So as the temperature falls the water gradually condenses out of the air and falls over a period of time rather than all at once.