It's important for mechanical engineering students to get what we old timers describe as an “intuitive feel” for their subject. Luckily such is possible in this field, but not always in other fields, such as in Quantum Mechanics. Here's my suggestion for such an intuitive feel.
Many of the answers give “correct” suggestions, but I don't see in any of them a way presented for the student to understand the physics that occurs as steam is giving up its internal energy in exchange for useful work.
Yes, it's due to the fact that latent heat is involved and that latent heat is orders of magnitude larger than sensible heat, or potential energy of compression, as you would have with using air as the working fluid. With compression of air, there's the added difficulty to hold onto all the energy put into compression. Compression increases the temperature of the air, and if the air storage tank isn't insulated, you will lose much of the compression energy in the form of heat to the environment.
Here's the crux. Steam is usually introduced into piston engines and turbomachinery in the supersaturated state. In this state, it contains energy in a way similar to compressed air: there's no phase change. Thus, in the first moments in its travel through the machinery, it gives up its enthalpy (the best measure of energy transferred) just like compressed air does, until it begins to condense, which will occur when its pressure and temperature allow it, as it flows through its change of state within the machinery. With condensation, latent energy is released, and that “extra” energy can be intuitively visualized as a way for the liquid-to-vapor transition to add to its volume, with a tendency to increase its pressure above the pressure that it would experience without the phase change. As the steam flow continues down to lower pressures, more latent heat is given up, effectively keeping it's pressure at higher levels than it would be without the change of phase.
There's a very complicated relationship among the actual pressure experienced, the actual temperature experienced, and the amount of liquid water formed. There can be no latent energy release without the formation of liquid water, and the liquid water can cause damage to turbomachinery. 568
Thus the process is controlled and by the time the steam exits the machine, very little actual liquid water is present. It's a bit magical.
As some others point out here, that exiting steam is introduced to the condenser, which causes a partial vacuum in the condenser, increasing the overall pressure difference across the machine. When the steam enters the condenser, it's “quality” is relatively low. Quality is the mass fraction of vapor to liquid in a saturated fluid. Zero quality is all liquid. 100% quality is all vapor. And also as pointed out, the liquid water leaving the condenser requires much less energy to pump up to the boiler pressure, than if it were in gaseous form. That's because water is nearly incompressible, and work done is force times distance. With very little distance, there's little work done.
From this view, one can see very easily that latent heat is a very important aspect to the use of steam as a working fluid. It takes much energy to vaporize liquid, but you get much of that energy back in the expansion process. Latent heat can be viewed as a large bucket, enabling you to carry a large amount of energy to the workings of the machine. With air, there's no such mechanism and you can't carry nearly as much energy to the machine. 479