The warm moist surface is usually a warm body of water, though it may be the wet ground or other wet surface, heated by the sun. In Southern California, more often than not, it is a heated swimming pool (!). Indoors, a hot cup of coffee, bowl of soup, or boiling pot of water can act as a warm, moist surface.

The air in contact with the warm, moist surface heats up by conduction; it also becomes humidified by water evaporating from the surface (that's why it won't work as well if the surface is dry). This warm air is more buoyant than the cooler air above, so it tends to rise upward and mix with the colder air. The cold air mixing in lowers the temperature of the humid air, and can form fog droplets if the cooling is sufficient. The alternate name "steam fog" comes from the fog's appearance as rising "steam". If there is a wind, the "steam" is blown off so it looks like the wind is what's forming fog (so you must evaluate the conditions before calling this evaporation or advection fog: is the surface cool, or is it warm and moist?).

Notice that the foggy region does not start until a short distance above the warm surface---close to the surface, the air is still too hot to form condensation. This is most easily observed by looking at the steam forming above boiling water.