Steam is water which has been changed into a gas. Steam cannot be seen for it is colorless. The cloud of vapor that we see beginning about 2 centimeter from the spout of a teakettle is not steam. The real steam is in the space that seems vacant just outside the spout. The cloud we see is the water that the cooler air has changed from a gas form back into tiny water particles. Steam is formed by boiling or by evaporation. At sea level water boils when it is heated to 100° C. Water also evaporates at lower temperatures. The steam caused by boiling is as hot as the boiling water. The steam caused by evaporation is not hot. Usually, the word steam refers to hot steam. When water reaches the boiling point, bubbles of the steam begin to rise through it and escape into the air. The temperature will remain at the boiling point until all the liquid has become gas. It requires 100 calories of heat to raise one gram of water from the freezing point (0°C) to the boiling point. Steam fills more space than the water from which it comes, at the moment when boiling stops, the gas is 1,67 times as great in volume as the former liquid. At this stage it is called saturated steam, if heated more, it takes up even more space. Then it is known as super heated steam. The steam engine is built on this principle.
A steam engine is a machine that burns coal to release the heat energy it contains—so it's an example of what we call a heat engine. It's a bit like a giant kettle sitting on top of a coal fire. The heat from the fire boils the water in the kettle and turns it into steam. But instead of blowing off uselessly into the air, like the steam from a kettle, the steam is captured and used to power a machine.