if the water mist is fine enough, it will break down to bare elements when subject to severe heat. .. 2part hydrogen - combustable! and 1part oxygen - combustable.
hence extra fuel to burn with, bigger bang.
that's one theory on it that i haven't heard before
the idea in most applications of water injection is to supress detonation by reducing the charge air temperatures through the latent heat required for vaporisation (the change of state from liquid to gas) - rather than retarding the ignition.
the fact that the water (or steam as we call it when vaporised) takes up volume in the cylinder/combustion chamber that could have otherwise been used for air (containing combustible oxygen but a much larger portion of non combustible nitrogen) and fuel is said by some to make it less effective than if you were to not get in the position of requiring cooling to prevent detonation in the first place, such as lower compression ratio (real or effective), higher octane fuel, etc, etc.
other parties, particularly those involved in selling such systems, believe otherwise.
the german air force used to use water injection very effectively in their supercharged engines - although maybe not quite effectively enough when you look at the battle of britain