1) When the air inside the bottle is saturated with water vapour and the smoke of the incense stick is inserted in it.The smoke particles acts as a nucleus for the water vapours and thus cloud formation takes place.
2)When these droplets will become heavier they will come down as a water and thus fog will disappear.
3)When pressure is high it causes condensed droplets to come down thus disappearing fog.
4) The fog is observed inside the bottle if the pressure inside the bottle is low.