You know how if your pour a cold drink after a short time the outside of the glass becomes wet? That’s because the glass became cold enough for water condensation to form.
Clouds are made of water condensation and need cold enough air to form.
And the air is different temperature at different heights. It gets colder as you get higher. Those flat bottom clouds are where the air directly below them is just slightly too warm for water condensation, so it makes a visible boundary.
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