A funnel cloud is a condensation funnel extending downward from the the base of a towering cumulus, congestus or cumlonimbus cloud. True funnel clouds are always associated with a rotating cone-shaped column of air that is not in contact with the ground. They often form at the base of a thunderstorm or a wall cloud. False signatures will not last long, and will not exhibit rotation.
The meteorologists word for condensation funnel is tuba (tub), the Latin word for trumpet. A tuba is a supplementary cloud feature, known as accessory cloud The tuba or condensation funnel is visible as a result of reduced pressure in a vortex causing the water vapour to condensate.
People often use the terms tornado and funnel cloud interchangeably. There is however a distinct difference. A condensation funnel is a tornado, not a funnel cloud, if either a) it is in contact with the ground or b) a debris cloud or dust whirl is visible beneath it. Funnel clouds have no detectable debris or damage at ground level. The same is true for waterspouts. If there is a dark spot appearing on the sea surface underneath a condensation funnel, than it is a waterspout. If not, it's a funnel cloud.
Related features:
Accessory clouds
Doppler radar