Liquid or gas pollution causes fluid degradation. Contamination changes viscosity , increases acid number and accelerates oil oxidation. (Aging)
The presence of water can modify the filterability of the fluid. The oil loses its lubricity. Water or a mixture of 2 incompatible oils causes emulsion and poor deaeration of the oil.
The acceptable water content for hydraulic installations is 0.05%.
That is 10 cl for a 200 liter tank