Chiffon sponge is very light yet moist, because it relies on both whipped egg whites and oil. The crumb is springy rather than crumbly. The main trap is sinking: the foam was deflated, or the cake was taken out of its tin too early.

Ingredients and what each one does

Eggs are separated: the yolks go into the batter, the whites are whipped separately into a strong foam that lifts the cake.
Sugar goes partly into the yolk mixture and partly into the whites, where it steadies the foam.
Flour is the frame. A modest amount keeps the layer light.
Oil adds moisture that doesn’t harden when cold, so chiffon stays soft from the fridge, unlike a butter sponge.

How to make it

Whisk the yolks with part of the sugar, the oil and a liquid (water, milk or juice) until smooth. Add the flour and mix to a smooth batter with no lumps. You can mix freely here: the oil limits gluten.
Whip the whites separately in a perfectly clean, dry bowl with no grease, since any trace of fat stops the foam rising. Add the sugar gradually and whip to stiff peaks without letting them turn grainy.
Fold the whites into the yolk batter in three additions with a spatula, cutting down and sweeping up. The first addition loosens the batter; fold the rest very gently, only until the white streaks disappear.
Leave the tin ungreased so the batter can cling to the sides and climb. Bake until the top is golden and springy and a skewer is dry: roughly 30–40 minutes at 160–170 °C, depending on the tin.
Straight out of the oven, turn the tin upside down (on a bottle or on the tin’s feet) and cool it completely that way. The cake is still soft and would sink under its own weight; upside down it stretches and keeps its height.
Run a knife around the sides and release.

What can go wrong

Sunk. The foam was deflated, the tin was greased, or the cake wasn’t cooled upside down.
Rubbery layer at the bottom. The whites weren’t folded in well, leaving a layer of yolk batter that didn’t rise.
Cracked top. The oven was too hot.
Whites won’t whip. A bit of yolk or grease got in.

Substitutions

Any neutral oil works. Butter makes a firmer, denser crumb that hardens in the cold. Replacing some of the flour with cornflour gives a softer crumb; try it and compare.

Storage

Two days wrapped at room temperature. In the fridge it stays soft thanks to the oil. Freezes for a month.