Fog or smoke coming out from the air vents on your air conditioner is caused by cold, dry air coming in contact with warm, moist air near the air conditioner. If the air temperature near the unit is below the dew point, this causes water vapor to form in the air and condense into water droplets, thus causing fog or smoke.
A dirty air filter or low fan speed may aggravate the condition. These conditions reduce airflow around the air conditioner causing more or slower exposure of the cold air to the moist air. The higher the humidity in the room, the worse the fog or smoke may be.