An increasing number of QSO absorption line observations have suggested a population of dense (n ~ 1 cm^-3), compact (r ~ 30 pc) photoionized clouds out near the virial radius of galactic halos. This appears theoretically puzzling. We show this is an inevitable outcome of cooling-aided fragmentation, and that clouds are potentially much smaller (~0.001 pc) than observational upper limits. Cold gas in galactic halos is a fog of tiny suspended droplets. This vast increase of surface area to volume has important implications for cloud survival, kinematics and radiative transfer. It also means it is hopeless to resolve cold gas in cosmological simulations, and that a new approach is needed.