If clouds are made of water, why do they look grey and fluffy?

The main reason is the thickness of the cloud. A nice light fair weather cumulus tends to be quite shallow at times but as it gets bigger and bigger we sense less light coming through the cloud, and that tends to be really dark. So you get these big areas of stratocumulus that cover the sky, not a lot of sunshine gets beneath them so there's lots of shadow beneath the cloud, which makes it appear dark.