Diyas have wicks that are made of cotton . Cotton has air spaces among its particles . When soaked in water these spaces get waterlogged or become filled with water . Oil and water are immiscible . They do not mix together . Adding to explanation, Oil and water are both fluids. They don't have fixed shape and take shape of container . Both of them in seperate cases will try to occupy space between cotton particles . When only oil is used these spaces are wholly occupied by oil and more oil gets absorbed . If water is used then there is less room for oil to do the same .

Oil and water are both fluids. They don't have fixed shape and take shape of container . Both oil and water will try to occupy space between clay particles . Once we log diyas in water the interparticle spaces are filled with water . Oil and water do not mix into one another. So oil cannot occupy the space that had been occupied by water . Absorption by definition is when substance get soaked in the interparticle spaces .less oil absorption takes place . .