The space between soil particles is referred to as "voids" or "pores".  This is the area where water can reside in the soil.  Therefore, the composition of a soil has a significant effect on the amount of water it can hold.

To envision porosity, look at the picture on the bottom left.  If the solid portion of the soil could be completely compacted, so all the air and water were squeezed out of it, it would have zero porosity.  In this case, one cubic meter of soil contains 0.7 cubic meters of soil particles, and therefore 0.3 cubic meters are occupied by either water or air (voids).  Porosity can then be calculated with this equation:

Porosity = void volume ÷ soil volume

Porosity = 0.3 cubic meters ÷ 1.0 cubic meters

Porosity = 0.3