The water droplets seen on the outer surface of a glass containing ice-cold water form due to the process of condensation. The glass surface becomes cold because of the ice water inside. The air around the glass contains water vapor (moisture). When this warm, moist air touches the cold surface of the glass, it cools down, losing energy. As a result, the water vapor in the air changes from a gas to liquid form, creating tiny water droplets on the glass surface. This is similar to dew formation and happens because cold air cannot hold as much moisture as warm air, so the moisture condenses on the colder glass surface.