@gillie-0 The whole diagram shows dependency of various things depending on height and temperature. The right colored line(red ) is predicted temperature based on height. The left (blue line) shows dew point i.e. temperature at which will condense water in given height. If those two lines are in any point close to each other it will meant that at this height there will be clouds/fog, further they are apart there is smaller probability of clouds.
Then there are two grey lines the shallower one shows how much would cool the air with height if there were no condensation (i.e. not in cloud) the steeper one shows how it would cool if condensation would occur i.e in a cloud. Now imagine you have the bag of air and you fly with it. It will cool quite fast when going up because of expansion (gases cool down when they expand) and it would cool exactly along the shallower grey line, up until you would hit dew point (the water would start to condense), and from that point it would cool along the steeper grey line.
And that is it. Now you can predict storms;), if your bag would cool slower than the red line with height, it would get warmer relative to surroundings and warm air goes up so it would be warmer and warmer, and it would go faster and faster up and thats how storms are created, a lot of warm air goes up with all the moisture which then goes down as rain.