Wet testing is normally used only when a failure has occurred during the dry test to determine where the leak occurred. The watch movement is removed and the case is placed in a chamber with water. The watch case is suspended over the water and the chamber is pressurized to the prescribed depth. The watch case is given a few minutes to normalize then the watch case is slowly submerged into the water and observed for any sign of a leak which shows up as bubbles leaving a seam or crown. This way the location of the leak can be identified and repaired appropriately.
Usually a leak is caused by a gasket failure but other examples could be a damaged crystal, crown or case.