When air is compressed, it produces water as a byproduct. This is because air naturally contains water vapor. Pressure and temperature affect the amount of water that air can hold, so the greater the temperature, the higher the water content of the air. The compressed air cannot contain as much water as unpressurized air, so the water vapor condenses to form liquid water. Water can build up inside the air compressor and in other parts, and if not addressed, this moisture can lead to the degradation of your tools. Using a water separator can help eliminate this problem.