Condensation is a natural phenomenon when water vapor condenses into liquid.  Regarding your car's headlights, this phenomenon occurs when the outside air is colder than the inside air.  The temperature of the bulb combined with cold weather can create the perfect environment for condensation, causing water droplets to form inside your headlights.  While some condensation is normal, excess water may indicate a crack in the headlamp or a problem with the headlamp rubber seal.  

This trapped moisture can dim and blur your headlights, which can affect your visibility on the road at night.  Aside from a little trouble, it's dangerous to drive with condensation on your headlights. 

What is the cause of fog?  

All modern headlights are ventilated through small holes at the top and bottom.  Ideally, they allow air to flow gently through the enclosure.  If there is no ventilation, condensation cannot disappear.  However, this air flow can also allow moisture into the headlights.  When it's cold outside and hot inside, the same thing happens to the headlight glass.  You get a film of condensation.

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