In essence, YES, it is water vapor. The PG and Nicotine are rapidly absorbed by the body, and on the exhale, trace (but measurable) amounts of Glycerine are found, but mostly it is water.
There is an older study (which was quite conclusive on these findings), which found the exhale to be mostly water, with trace amounts of Glycerine, extremely low traces of nicotine (1/35th the level of passive second-hand smoke of a traditional cigarette), and zero findings of toxic or carcinogenic substances.
Also notable in the study:
No glycerine was detected in air during cigarette smoking. On the other
hand,72μg/m3 were detected during e-smoking.
This amount is much lower than the threshold safety
imit (TWA-TLV10mg/m3)and much lower than
the threshold for moderate risk.
However, it’s important to note that acrolein, a molecule formed by dehydration of glycerine due
to high temperatures, was present in the air of the
room during cigarette smoking test (20μg/m3). In fact, it is well known that glycerine is often added to moisten tobacco.
During combustion glycerine is transformed into acrolein. The fact that
no combustion is involved when using e-cigarettes probably plays a fundamental role in the absence of
acrolein from indoor air during their use. As everyone knows, acrolein is a very toxic and
irritating substance. Moreover it is currently suspected of having a fundamental role in the carcinogenic process.
