Humidity is moisture in the air in the form of invisible watervapor. See absolute humidity and relative humidity.

Above definition Copyright © The Home Ventilating Institute. Some content originally appeared in John Bower's book, Understanding Ventilation, published in 1995 by The Healthy House Institute.

From HousekeepingChannel.com:

Simply put, humidity is moisture in the air in the form of invisible water vapor. The air within a dwelling has moisture added to it by human and plant respiration, cooking, showering, bathing, laundry operations, and even dishwashing and wiping.

To prevent moisture-laden air from building up within a structure, many of the areas where these activities take place are vented to the outside. Ventilation fans in bathrooms, kitchens, and on clothes dryers are essential for control of humidity in the home.

High humidity for prolonged periods promotes the growth of mold and mildew due to condensation. Musty odors and allergic reactions increase, and moisture stains on walls and ceilings become apparent.   

On the other hand, if it’s too dry, family members may experience frequent nosebleeds, dry skin, or respiratory problems. Furniture joints dry out and loosen, and static electricity is common.
 
The optimum range for all seasons is a relative humidity of 30 to 50 percent. Indoor humidity may be measured with an inexpensive instrument called a hygrometer, which is sold by some home centers, hardware stores, and specialty retailers.

Excessive humidity is common in basements. Portable dehumidifiers, available for $200 to $300, are refrigeration machines that condense excess water vapor from the air and collect it for either manual removal in an internal container or automatic removal via a pump.

Dry indoor air is a consequence of winter heating coupled with inadequate insulation and/or sealing around doors, windows or other openings in the home “envelope.” Inexpensive portable humidifiers will add desired humidity to single rooms. You’ll need to hire a heating professional to install a whole-house system, which attaches to the furnace. Re-caulking and sealing windows and other openings can also help. Call a contractor to improve insulation inside your home’s walls.