The adiabatic lapse rate describes how the temperature of an air parcel changes as it moves vertically without heat exchange. The dry rate (~9.8 °C/km) applies to unsaturated air; the moist rate (~5–7 °C/km, variable) applies to saturated air, because condensation releases latent heat that slows cooling.
Key to stability
Comparing the adiabatic rate with the actual atmospheric lapse rate determines stability: if rising air cools more slowly than its surroundings (actual lapse rate > adiabatic), it keeps rising (unstable). This concept explains the formation of cumulus and thunderstorms.