The key difference is that gaseous water vapor does not block oxygen from reaching the blood vessels or carbon dioxide from escaping from them. Liquid water will form a layer over the blood vessels, keeping them from exchanging gases properly. This is the difference between a liquid and a gas.
Trace amounts of liquid water won’t cause issues either, between it not blocking enough vessel surface area and getting fairly absorbed into the body. Roughly speaking, you need about 1 ml of liquid water in the lungs per kg you weigh, putting an average adult at around ¼ cup/60 ml needed to drown. The exact amount will vary from person to person and incident to incident, and I strongly do not recommend testing it yourself.
Water vapor can theoretically condense in the lungs, but will only do so in any quantity once the temperature drops below the dew point. Practically, for this to occur in the lungs, the air temperature would need to be higher than body temperature with extremely high humidity. This would be absolutely miserable to be in: the heat index would be at least 188F/87C – for comparison, a hot sauna is generally no higher than 175F/80C.
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