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I like to talk about tornadoes when I can…
This is a tornado in the dissipating or “rope” stage. In supercell (rotating) thunderstorms, cooler, stable air wraps around the rotational center. This is the rear flank downdraft (RFD) and it can choke off the warm, unstable air that gives tornadoes the swift rising motion (updraft) they require. The higher cloud bases to the left indicate this stable intrusion. A tornado can actually transition from a big wedge to a rope pretty quickly if the RFD is strong enough.
Now you mentioned waterspouts…
They are tornadoes, too. (The definition of tornadoes is actually less absolute than one might imagine.) A waterspout is technically any tornado that occurs over water. But most of them are a different breed. They can occur within updrafts weak enough to only produce a “cotton ball” cumulus cloud, as opposed to the strong updrafts of supercells. But if there’s a land-sea/lake breeze boundary, that can provide enough spin in conjunction with the updraft to get a tornado.
And the common waterspout has a land-based cousin. It’s called a landspout – go figure. It forms in a very similar fashion. It just needs some type of air mass boundary and a sufficient updraft. They mostly occur in semi-arid climates and over terrain that’s higher in elevation. These conditions allow near-surface air to get a lot hotter than the air above it, making it more frequently unstable. Eastern Colorado gets a lot of landspouts.
Then there are a whole bunch of other breeds that be hard to classify at times, like tornadoes spawning on little rotational kinks in squall lines. I’ve even seen a tornado form on an RFD boundary ([this one](http://www.youtube.com/watch?v=lmSHUA-jmxU)) where the tornado was not directly linked to the main rotation (that big cloud mass the video starts with).
The basic rule of thumb is, you need some kind of rotation in the atmosphere, be it spread through the air or concentrated on a boundary, and an updraft strong enough to get that spin vertical (if it’s not already) and touching the ground.
But the atmosphere is a crazy and chaotic playground.
Edit: cleaned it up a bit