"Many pilots are familiar with visible and infrared satellite images. They are ordinarily unfamiliar with the water vapor satellite image such as the one shown here.
The water vapor image displays the earth in a manner that correlates to the quantity of water vapor in the upper portions of the atmosphere, generally 20,000 feet and higher. The actual numbers displayed on this color enhanced water vapor image correspond to temperature, but there is no direct relationship between these values and the temperatures of clouds - as is the case for color-enhanced infrared satellite images. In other words, this satellite channel doesn't really "see" clouds but "sees" high-level water vapor instead.
The most useful tidbit to be gained from the water vapor images is the locations of major storm systems and the jet stream. Another useful tidbit is aided by the color scale used on the images. In general, regions displayed in shades of red are VERY dry in the upper atmosphere and MAY correlate to crisp blue skies from a ground perspective. It is still possible that a low stratus deck or ground-hugging fog may be present under these areas since the satellite is only sensitive to moisture aloft.
On the contrary, regions displayed in shades of blue or green are indicative of lots of high-level moisture and may also indicate cloudiness. This cloudiness could simply be high-level cirrus clouds or serious storms. That determination cannot be gained from this image by itself, but could easily be determined when used in conjunction with the other satellite images."
Online source: http://aviationweather.gov/adds/satellite/