Water vapor is gaseous water. Its absorption and emission contribute to atmospheric radiative transfer and the greenhouse effect.
Steam is water in the gas phase. Its state depends on temperature and pressure; a visible cloud above boiling water consists mainly of condensed droplets rather than isolated gas molecules.
Condensation of steam releases latent heat, allowing water vapour to transfer substantial energy. The distinction between saturated and superheated vapour matters when connecting phase equilibrium with heat transfer.
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