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The cloud entity allows you to place clouds in the level. The cloud definition files (.xml) are built with the cloud tool. Unlike with skyboxes, 3D clouds can be move and players can fly though them.
RenderFog Volumes exhibit the same properties of a RenderFog Entity with the added benefit of locality. Currently supported volume types are boxes and ellipsoids (including spheres as a special case). The benefit of using a RenderFog Volume is that it is possible to define fog volumes that can be non-uniformly scaled along their major axes, rotated, and have an arbitrary fall-off direction (unlike global volumetric fog which defines the world space up-vector as its fall off direction).
An ellipsoid fog volume
Fog volumes are placed as entities. To place one open the RollupBar, select Entity, Render and then FogVolume in the tree view below. Drag the entity into the render view to place it. You should be see a white, spherical fog volume.