Why does steam at 100 degrees Celsius is better for heating purpose than water at 100 degree Celcius?

What we define as "hot" or "cold" is the transfer of energy -- how much (quantity) and how fast (rate of transfer) -- and how it raises our temperature. The more energy that is transferred from the object quickly, the hotter the object feels.

First, steam is in a vaporized phase -- which is why it has more energy. At 100 Celsius, water can exist both in gaseous and liquid phases. However, to vaporize liquid water, an energy input is required. This energy (called vaporization energy) is specific to each material, but if added, won't raise the temperature, but will simply vaporize the liquid into a gas. So, by vaporizing 100C water, you have water vapor at 100 degrees. Similarly, you can condense this vapor, by removing that same amount of energy required to vaporize it. In that case, you'd recover water at 100 degrees.

When you touch something hot, it will transfer heat to you until the temperatures have equalized. So when you touch hot water, the water will simply transfer whatever energy it needs to reach your hand's surface temperature (which won't happen, you'll take your hand out much sooner). However, when you touch steam, it will also transfer the condensation energy to you -- which is actually a lot of energy. This energy drastically raises your hand's the temperature, and you feel it as "hot."

Consider the simple heat transfer equation: the heat transfer rate $H$ is $$H=kA \dfrac{T_\text{hot}-T_\text{cold}}L$$

$L$ is unimportant for our case. What is important is $k$, the thermal conductivity constant -- this constant depends on the material. The higher this constant, the faster heat gets transferred, so more heat gets transferred, and your hand's temperature increases.

Next, $A$ represents the contact area between the surfaces. As @Wrzlprmft points out, steam can more easily enter skin pores. This will ensure more heat is transferred, since the total contact area is greater.

We can also maximize heat transfer by increasing the temperature difference, $T_\text{hot}-T_\text{cold}$. The greater this difference, the greater the heat flow. Note that as heat flows, this difference will shrink. In the case of water, $T_\text{hot}$ gets lowered and $T_\text{cold}$ gets higher. However, with vapor at 100C, the condensation energy leaves the vapor first, without changing the gas's temperature, so $T_\text{hot}-T_\text{cold}$ shrinks more slowly; $T_\text{hot}$ does not change, and thus, heat transfer is faster. Furthermore, the condensation energy is, for lack of a better word, quite large, which means that a lot will be transferred at that high rate.

TLDR: The reason steam feels hotter, is that it can transfer more energy to us faster (that is, without decreasing its temperature by transferring condensation energy), whereas water cannot. Our feeling of what's hot is determined by how much energy and how quickly an object transfers that energy to raise our temperature.

Edit: I forgot to mention that unlike water, steam can be packed tightly because it is a gas. Depending on how compressed the steam is in a given volume, you may experience 100C steam to feel warmer or colder than 100C water. For the purpose of my answer, I assumed the steam to be dense and tightly packed -- which can eventually make up for steam's lower thermal conductivity constant.

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Explain why, steam at 100° C is better for heating purposes than boiling water at 100° C.

Steam at 100°C has more heat than water at the same temperature. Water gets converted into steam on gaining heat. Due to this latent heat of vaporisation, steam at 100°C is better for heating than boiling water at 100°C.

Concept: Change of State of Matter

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