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I guy i worked with new a guy back in the day that water injection. He said he some how drilled and taped in the head or something like that and injected water into each cylinder. he explained to me how it worked. I think it was the water took up some of room in the cylinder therefore he had higher compression and hence more power. But he would only use it when he was racing.
There are always troubles with water injection because the system has never been developed to be precise in delivering water at the optimum rate for the conditions.
As the water is subjected to the combustion temperature, it vaporizes at a rapid enough rate (changing from tiny droplets to a much expanded gas,) that it has the net effect of boosting the power and controlling peak combustion temperature. So you gain power. The advantage of being able to dial in more advance and controlling preignition allows you to extract the most from the gas/air mixture. Plus the expansion pressure of the water converting into a gaseous state also adds power.
Check out this webpage if you want to see what water injection does in the hands of someone with some brains, some tools, some money and some creative thinking.
I hope the link works. It is about a six cycle engine bruce crower built. Sounds like a great idea for new technology to stretch fuel efficiency even further.