Condensation happens whenever something is colder than the dewpoint of the surrounding air. The dewpoint rises or falls depending on how high the humidity is...the more humid it is, the higher the dewpoint, and the higher a temperature you need to maintain to avoid condensation.
Places were condensation can occur include the CPU, the waterblocks, any hoses, fittings, coldplates, etc., etc. If there's water tight insulation on something cold, then the moisture in the air can't get to it, so condensation doesn't form. Insulation works because the side of the insulation next to the cold item isn't exposed to air, and the side of the insulation that is exposed to air (and humidity) is several degrees warmer (hopefully, above the dew point temperature, whatever that happens to be).
Air conditioned air is usually very dry, so the dewpoint will usually be much lower inside an air conditioned building than it is outside in the heat and humidity. But you'll notice that condesation will form on a glass or bottle of a very cold beverage even in an air conditioned room, so there are limits to everything.




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