This is fuel that has been broken up into extremely fine particles (in a diesel engine, this is done by the injectors). The reason why fuel is atomised is to have a relatively large surface area for each atomised particle of fuelFlash video(Flash animation)

The only part of any fuel that burns is its vapour. The amount of vapour given off by a fuel is directly proportional to its surface area. If we had one large particle of fuel, this gives us a relatively small surface area. If we take the one big particle, and break it up into thousands of tiny individual particles (atomise it), then there is a huge increase in surface area.

This in turn helps the fuel vapourise, which, in turn helps the fuel to burn.

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