The traditional tagine cover is cone- or dome-shaped to return condensation to the bottom.
As food simmers, water in the ingredients turns into steam. The tall, relatively cool inner surface of the cover encourages that vapor to condense. Liquid then runs back toward the base, helping the stew remain moist while it cooks slowly. This is a simple closed-vessel design rather than a separate sauce-making step.
The technique is especially useful for braising meat, poultry, fish or vegetables. Because moisture is recycled, tagine cooking can use less added water than an open pot, while preserving concentrated flavors and producing tender food. The cover also helps retain aromatic steam from spices, herbs and other ingredients.
The lid does not literally manufacture water, and it does not return smoke or oil to the dish. Also, the effect varies with the ingredients, heat and fit of the lid. Unglazed ceramic may absorb some liquid, while decorative or poorly fitted vessels may not perform like a traditional cooking tagine.