No, those 2's up there aren't projected onto steam or vapour, they're actually made up of vapour. It's a tricky practice due to the whole "atoms constantly moving around in a floating cloud" thing, but they managed to figure out how to do it.
In their technique, the researchers first stored an image (for example, the number "2") in a light pulse. When that light pulse hits a gas of atoms, it is strongly absorbed, and excites the atoms. But when a second light beam is aimed at the gas, it drives the atoms to a unique quantum state, and causes the first pulse to pass through the vapour. This phenomenon is called electromagnetically induced transparency.
As previous experiments have shown, when the second light beam is shut off while the first pulse is inside the vapour, the first pulse can be completely stopped (and be temporarily stored inside the vapour). Then, by starting up the second beam again, the first pulse can be recovered.
OK, so we're only talking about the image retaining its shape for a few microseconds, but still, it's pretty sweet. Hopefully they'll perfect this tech and put it into the next version of the Happy Vappy. I'm ready and willing to test it out. [PhysOrg]