This is a graph that shows the vertical distribution of temperature and dew point temperature at Oakland at 12 UTC 8/12/97.

Note that the temperature in the lowest 200 meters or so (600 feet) of the atmospheric environment is nearly the same temperature as the dew point temperature. Remember that the DEW POINT temperature is the temperature to which air must be cooled at a given pressure in order for condesation to occur.

In this case, it seems like there is a cloud layer only about 600 feet thick.  Since most of the Coast Range is taller than that, the foggy air will not penetrate further inland than the 600 foot elevation contour, and will spread further inland if elevations are less than 600 feet.

Take a look at the satellite image below.  It should make more sense now.  

To a large extent the clouds at a given level move with the wind at that level and the patterns in the cloud tell you something about the nature of the wind at that level, in this case, sealevel.