Fog of War surrounds anywhere you have not visited with complete blackness. Once your creatures have visited an area, the fog will lift around where they can see. You can never be sure what's lying in wait for you behind the fog, so always dig carefully.
You can see through the fog using the Sight of Evil spell, allowing you to see anything in a small area. One cannot cast spells through the fog, except for Sight of Evil (and certain aggressive spells cast through the area temporarily uncovered). To a lesser (and much more expensive) extent one can use a combination of Sight of Evil and Destroy Walls to permanently reveal the collapsed area. This is very expensive, so it is not advised, but can be used to open up enemy fortifications and get a quick look around with a possessed Imp, for example.
One can permanently lift all of the fog from a level by either finding a Reveal Map special, or casting the Armageddon spell. Gold seams that are revealed by the dungeon special, but subsequently mined-out by the enemy in the course of the game, are once again obscured. As to the Armageddon spell, the lifted fog is merely a byproduct. It is pointless to cast such a powerful spell just to reveal the map, since as it brings about a decisive, game-ending battle.
Note that in all maps, Impenetrable Rock, Gold Seam and Gem Seam are always visible within the fog, which gives a clue to the player about what is in store for them. The player can look for any strange areas carved into the rock, possibly hinting at secrets, while in later levels, large veins of gold or seams of gems are usually well-guarded.
Dungeon Keeper 2Edit
Unlike in the previous game, the Fog of War looks like faint earth walls, and only gives more of an idea of what is underneath when you get closer, and is finally revealed when the area is open for your creatures to inspect. This fog does not reveal gold, gems or solid rock until you get closer to the area, in which some of these will be revealed. As before, SIght of Evil will help lift the fog temporarily.
Fog Of War can be Disabled in Skirmish mode.