Because your body is like "oh, I don't need to retain any water.. I'm receiving sufficient supply now" instead of "oh sh*t, we aren't getting much water... better retain some of it just in case."
it has to do with ridding your body of sodium which most of us consume way too much of each day and is only excreted in sweat and urine. drinking more water helps flush your body and when you do it continually for an extended period your cells retain less water.