Unequal heating of landmasses causes the warm/heated air to rise up. As the warm air rises up it expands and cools down. Warm air can hold water vapour well but cool air is incapable of holding water vapour. So the water vapour condenses on the dust particles already present in air and a tiny droplet is formed around the dust particles thus forming clouds.

Clouds are formed in the earth’s Troposphere where weather phenomenon occurs.