A cloud forms when air heated by the sun rises like a balloon. As it rises, it slowly cools until it reaches the saturation point and water condenses, forming a cloud. As long as the cloud (and air its made of) is warmer than the outside air around it, it "floats", or stays suspended.
Once it cools enough or gets heavy enough water drops out.
Clouds are ususally a mixture of water droplets and ice crystals.