Like light mist unknown in market town on Wye (4)
I believe the answer is:
hazy
'like light mist' is the definition.
(a mist might be hazy)
'unknown in market town on wye' is the wordplay.
'unknown' becomes 'z' (algebra).
'in' means one lot of letters goes inside another.
'market town on wye' becomes 'Hay' (Hay-on-Wye is a Welsh town).
'z' inserted inside 'hay' is 'HAZY'.
(Other definitions for hazy that I've seen before include "Blurred" , "Unclear" , "Nebulous" , "Not clear" , "Slightly misty, vague" .)