In physical chemistry, and in engineering, steam refers to vaporized water. It is a pure, completely invisible gas (for mist see below). At standard temperature and pressure, pure steam (unmixed with air, but in equilibrium with liquid water) occupies about 1,600 times the volume of an equal mass of liquid water. In the atmosphere, the partial pressure of water is much lower than 1 atm, therefore gaseous water can exist at temperatures much lower than 100 C (see water vapor and humidity).
In common speech, steam most often refers to the white mist that condenses above boiling water as the hot vapor ("steam" in the first sense) mixes with the cooler air. This mist is made of tiny droplets of liquid water, not gaseous water, so it is no longer technically steam. In the spout of a steaming kettle, the spot where there is no condensed water vapor, where there appears to be nothing there, is steam.
A steam engine uses the expansion of steam in order to drive a piston or turbine to perform mechanical work. In other industrial applications steam is used for energy storage, which is introduced and extracted by heat transfer, usually through pipes. Steam is a capacious reservoir for energy because of water's high heat of vaporization. The ability to return condensed steam as water-liquid to the boiler at high pressure with relatively little expenditure of pumping power is also important. Engineers use an idealised thermodynamic cycle, the Rankine cycle, to model the behaviour of steam engines.
In the U.S., more than 86% of electric power is produced using steam as the working fluid, nearly all by steam turbines. Condensation of steam to water often occurs at the low-pressure end of a steam turbine, since this maximises the energy efficiency, but such wet-steam conditions have to be limited to avoid excessive turbine blade erosion.
When liquid water comes in contact with a very hot substance (such as lava, or molten metal) it can flash into steam very quickly; this is called a steam explosion. Such an explosion was probably responsible for much of the damage in the Chernobyl accident and for many so-called 'foundry accidents'.
Steam's capacity to transfer heat is also used in the home: for cooking vegetables, steam cleaning of fabric and carpets, and heating buildings. In each case, water is heated in a boiler, and the steam carries the energy to a target object. "Steam showers" are actually low-temperature mist-generators, and do not actually use steam.
In electric generation, steam is typically condensed at the end of its expansion cycle, and returned to the boiler for re-use. However in cogeneration, steam is piped into buildings to provide heat energy after its use in the electric generation cycle. The world's biggest steam generation system is Con Edison in New York City which pumps steam into 100,000 buildings in Manhattan from seven cogeneration plants.