Typically, coastal fog forms when it is hot inland (e.g., Santa Ynez Valley) and cool offshore. Winds flow onshore due to the temperature gradient. As the cool water condenses into the warmer atmosphere, fog forms over the ocean and the winds transport it over Santa Barbara.
The mountains just behind Santa Barbara trap the fog. The marine layer is different. That is formed when a layer of cool coastal air is trapped beneath a layer of warm, drier air. The warm, dry air causes evaporation of the ocean surface. The moist air is then trapped within the layer of cool coastal air. The marine layer is what we experienced over the last few weeks (interspersed with a low pressure system offshore, which caused the light rain).

I think it works something like this:
In the summer around here there's often a high pressure cell that tends to push air towards the coast.Because the California Current comes down from Alaska and because winds can cause upwelling, nearshore waters are relatively cold. Therefore, when warmer air flows out over the colder water, it cools and condenses, producing fog. Then, if there is sufficiently strong solar heating inland, the air there will rise, creating an area of low pressure that sucks the fog back towards shore. The fog will typically roll in late in the day and will persist until the sun rewarms the air enough to revaporize the droplets - if we're lucky, such a "burn off" occurs the next morning/afternoon.
Hope this helps,

This phenomena is very common along the northern coast of California.
At the simplest level it can be explained as the result of hot air in the central valley and cool ocean currents offshore.
In California's 500-mile-long Central Valley, the summer sun heats the air, which rises and is replaced at the surface by cool ocean air drawn inland.
In addition to the pull from the valley, the marine air is pushed by the Pacific High, a mountain of heavy air over the ocean 1,000 miles or more offshore. Around it circulate winds that approach California from the northwest.
That incoming sea air is likely to contain fog: The wind from the ocean, blowing down California's slanting coastline, pushes the ocean surface southward. Owing to the rotation of the Earth, the sun-warmed surface water tends to veer offshore, causing an upwelling of colder water from the sunless depths.
That icy brine from the sea bottom refrigerates the ocean air and condenses its moisture into visible form, creating the great fog bank that hangs intermittently along the Northern California coast most of the summer.
Although the fog may evaporate before it reaches the valley, the wind that brings it continues inland and after a few days cools off the valley, much as a draft from an open door lowers the temperature in a warm room. In the valley the mercury may drop from above 100 into the 80s.
Without the intense valley heat to draw the ocean air eastward, the wind and fog diminish and disappear. The coastline enjoy clear weather, which continues for a few days until the valley heats up again, once more attracting the wind and fog. Three or four days of fog are succeeded by three or four days of sun, completing a weekly cycle that continues through the summer.


The Santa Barbara coast is normally not so much effected by the inland heat as the coastline further north and we see less foggy days as people in the Bay Area.



For more information and a very good explanation on how the fog forms in the Bay Area check this web site:
http://keck.ucsf.edu/~kempter/Fog/mn_fog2.jpg