Why are clouds sometimes round and fluffy on top, and smooth and flat underneath?

As we know, temperature typically doesn't vary dramatically in the horizontal, but temperature does vary with height. In fact, temperature typically decreases with height, as can be found when climbing a mountain. This fact means that the condensation point is also horizontally uniform at a given altitude. Above this altitude, water vapor will condense out to form clouds, below it water will remain in its gaseous state. Therefore, because the point at which condensation occurs tends to be about as uniform as surface temperature, the bottoms of most clouds will appear flat.

Even though the condensation point tends to be at a constant altitude, the cloud will continue to grow vertically after condensation. How high it will grow depends again on the three factors discussed above. However, as the cloud grows vertically, it will draw in drier air from the surrounding atmosphere. The cloud will then start to evaporate along the edges and erode, leading to the "fluffy" look.

Not all clouds, however, have a rounded, fluffy appearance on top. Those that do are called cumulus clouds. They are formed as warm, moist air rises and cools to the condensation point. The air stops rising when it cools to the temperature of the surrounding air in the atmosphere. In contrast, stratus clouds form when the ambient temperature of the air reaches the condensation point by being forced aloft, such as over a warm frontal boundary. There is little vertical motion of the air, so the clouds form in place and have a flat bottom AND top. Both types have "flat" bottoms though, formed through the process discussed above.