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How does a vertical moisture trap work?

Ok, I grabbed this photo from the Yong Heng thread just as an example. Nice setup @MarkNagel 
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I guess my google-fu is weak on this one. Rather than derail the other thread, I'll just ask here. My Daystate 110v compressor has a vertical trap similar to this but what baffles me is how does it work? What's the simple explanation or science behind it? High pressure inlet on top, hp outlet close to the top and bleed valve on the bottom. So why does the moisture condense at the bottom where we can bleed it off. I'd like to understand the why of it all.

cheers