What characteristic of soil is most important in determining water-holding capacity?

The important characteristic of soil that determines the water holding capacity is the composition of the soil. The denser the soil the higher could be the capacity of holding water. clay of all soils have better capacity because it is dense with very small particles preventing the water to escape which is not the case with normal sand which may allow water to flow off.

The soil's ability to hold water mostly depends on its porosity, or more simply its composition. If the soil is made out of materials like clay, which have smaller particles that enable more water to stick to it, then the soil will be able to hold a lot of water.