Hi Third Mate,
You seem to be confusing smoke with steam. What comes out the stack is usually smoke—a product of the combustion of the fuel. Its color varies with the type of fuel—wood, coal, oil—and how it is fired.
Under some circumstances, steam may also come, or appear to come, from the stack—or from a small pipe attached to the stack: Excess steam pressure may be vented, or on smaller engines, used for induced draft.
In SS, smoke is an effect that has an impact on frame rate. Often it is not shown unless the view is from within some maximum distance.
Regards,
Marty