Explanation:

Mist:
Mist is a phenomenon that occurs when tiny droplets of water are suspended in the air. These droplets are so small and light that they can float in the air. Mist is typically formed when warm air comes into contact with a cooler surface, causing the moisture in the air to condense into tiny droplets. Mist is usually found close to the ground and can reduce visibility.

Condensation of Water Vapour:
When water vapor in the air cools down, it loses energy and begins to condense into liquid water droplets. This process is known as condensation. It occurs when the air becomes saturated with water vapor and can no longer hold all the moisture. The excess moisture then condenses onto surfaces or forms tiny droplets in the air.

Formation of Clouds at Ground Level:
When the condensation of water vapor occurs close to the ground, it can form clouds at ground level. These clouds are called mist. Mist is similar to fog but is typically less dense and covers a smaller area. Mist often occurs in areas with high humidity or near bodies of water where there is a greater amount of moisture in the air.

Clouds vs. Mist vs. Fog:
- Clouds: Clouds are formed when water vapor condenses into visible water droplets or ice crystals high in the Earth's atmosphere. Clouds can be found at various altitudes and are responsible for various weather conditions.
- Mist: Mist is a type of cloud that forms at ground level. It consists of tiny water droplets suspended in the air and can reduce visibility.
- Fog: Fog is similar to mist but is typically denser and covers a larger area. It is formed when the air near the ground becomes saturated with moisture and cools down, causing the water vapor to condense into droplets.

Conclusion:
In conclusion, when water vapor in the air condenses close to the ground, it forms small droplets of water that float about, creating mist. Mist is a type of cloud that forms at ground level and can reduce visibility. Therefore, the correct answer is option 'B' - Mist.