What does 'saturated' air actually mean? I'm having some problem in getting an insight on what 'saturation with vapor' actually means. The question is asked in the context of atmospheric air becoming saturated with water vapor and beginning to condense. As far as I understand, when vapor is added to a volume of air, water molecules replace air molecules rather than just squeezing into the space between existing molecules (Avogadro's law). Is that a wrong impression? If not, does 'saturation with water vapor' (100% humidity) mean there are no more air molecules in that volume, and it is completely occupied by water molecules? Or are they getting equal in number?
 A: Air may contain various amounts of water vapor. For a given temperature and pressure, there is a limit to the percentage of water vapor the air may hold. Beyond that limit, water vapor will condense into water droplets, and be removed from the gaseous/vapor phase of the air. That condensation is commonly seen as fog or dew.
Air that contains the maximum amount of water vapor for a given temperature and pressure is said to be saturated. Another way of saying the same thing is that the relative humidity is 100%.

does 'saturation with water vapor' (100% humidity) mean there are no more air molecules in that volume, and it is completely occupied by water molecules?

Absolutely not, at least if the temperature of the air is less than 100 degrees Celsius (212 degrees Fahrenheit). At "normal" air temperatures, the percentage of "air" molecules will always be much greater than the percentage of water molecules. However, over a boiling pot of water, the percentage of water molecules may dominate.

Or are they getting equal in number?

No. Again, at "normal" temperatures there will be more "air" molecules in the air than water molecules even when the air is saturated with water.
