When you are active the body perspires and gives off moisture in order to cool itself down. Thus the environment inside a waterproof shell or other jacket is very warm and heavily laden with water vapour. This vapour can then condense on the colder inside of your outer layer which causes water to build up inside the jacket even if no water penetrates from the outside. A breathable jacket allows water vapour to pass from the inside out so that you remain dry even when perspiring.
This refers to a fabric's capacity to be able to transmit perspiration and heat through the fabric membrane. An important consideration if you are going to stay dry and comfortable when working.
Transports moisture away from the body in order for it to remain dry.