I think water must have some effect -- while the theories that have been proposed before are likely true.. such as you are thirsty not hungry etc... I submit two other reasons for the effect.
(1) Water is "H2O" so that means you are taking in more than 2/3rds Oxygen. There is actually evidence out there that oxygen can increase weight loss. In fact some people go to what is called Oxygen therapy where they put the mask over their face and suck it down for weight loss. You may remember an infomercial a few years back with this lady who proposed weight loss just via breathing. I always thought that was intriguing. But based on that I have always wondered if exercise is good for you / weight loss because while you are breathing heavier you are getting more Oxygen - than if you were just sitting around the house.
(2) The liver is known to be the only fat burning organ in your body. The liver is the major fat burning organ in the body and regulates fat metabolism. And what keeps the liver in amazing shape... water! Water is great for the liver and kidneys and help both expel toxins and many other issues.
I went on a mostly liquid diet last year and while there were tons of reasons it could have worked so amazingly I have to note that a lot of liquid diets / fasting do work amazing. Also my liver enzymes fell like a stone... I have to think there is something to and and we are dehydrated. My hair was never thicker, my skin never better than when I was full on the liquid diet and since going off I have noticed dryer skin and hair, something I might not have noticed before because it doesn't look that bad.