Clouds increase atmospheric albedo, so daytime temperatures decrease due to the decreased absorption of sunlight by the ground. The higher water vapor content in a cloud compared to the surrounding air causes IR to be trapped, just as in the greenhouse effect, during the night, so nighttime temperatures are warmer when it's cloudy than when it's clear. This reduces the difference in temperature between the daily minimum and maximum temperatures. We define the daily range of temperature as the difference between the maximum and minimum temperatures for one day, so this is reduced or moderated by the presence of clouds.

Winds have a tendency to mix air vertically due to random turbulent motions in air flowing close to the ground. So at night, when there is a thin layer of cold air at the ground, the wind carries some of the cold air upward, mixing some of the warmer air aloft down to the ground as a result, so the overall temperature near the ground becomes higher. During the daytime, there will be a hot layer of air next to the ground, and this is transported upward by the wind and replaced by cold air from above, thus reducing the daytime temperature. The net result is similar to that of having clouds around---the daily range of temperature is reduced.