The short answer
Condensation beneath the crystal means that moisture is present inside the watch, but it doesn't necessarily mean the watch has been submerged or that water has recently entered it.
Air naturally contains moisture. If humid air is trapped inside a watch, a sudden change in temperature can cause that moisture to condense on the coolest surface, often the inside of the crystal.
A brief mist can therefore sometimes be the result of humidity and temperature change rather than obvious water ingress.
It still shouldn't be ignored.
From the bench
A watch case isn't assembled in a laboratory. When a caseback is opened for servicing, regulation or inspection, the air surrounding the watch becomes the air inside it when the case is closed again.
That air contains a certain amount of moisture depending upon the environment and humidity at the time.
Normally this causes no problem at all. But take a watch containing relatively warm, humid air into a significantly cooler environment and the temperature of the crystal can fall quickly enough for some of that moisture to appear as condensation.
This is why the appearance of mist beneath a crystal isn't, by itself, proof that a seal has failed or that somebody has got the watch wet.
There is, however, an important distinction between a brief light mist caused by a temperature change and visible droplets or condensation which remains beneath the crystal.
Persistent moisture can affect the dial and hands, encourage corrosion and contaminate the lubricants within the movement. On a vintage watch, some of those components may be difficult or impossible to replace without losing part of the watch's originality.
What we recommend
If you notice condensation beneath the crystal, move the watch away from the conditions that caused the sudden temperature change and see whether the mist clears.
If it disappears quickly and doesn't return, a change in temperature may simply have revealed moisture already present in the air inside the case.
If the condensation persists, forms visible droplets, repeatedly returns, or there is any possibility the watch has been exposed to water, stop wearing it and have it inspected.
Don't try to dry a vintage watch with a hairdryer, place it on a radiator or attempt to remove the caseback unless you have the appropriate tools and experience.
Most importantly, don't assume that because the condensation eventually disappears the moisture has disappeared from the watch. It may simply have returned to the air inside the case.
Condensation tells you moisture is present. It doesn't always tell you how it got there.