Compaction, in general, is the densification of soil by the removal of air, which requires mechanical energy. The degree of compaction of soil is measured in terms of its dry unit weight.
In 1993, R.R. proctor show that for any soil there exists a definite relationship between the soil water content and the dry density to which the soil can be compacted and that for a specific amount of compaction energy or effort applied on the soil there is a particular water content at which the soil attains its maximum dry density.
In addition to water to dry soil, it helps in bringing the soil particles together coating them with a thin film of water, i.e. it acts as a softening agent on the soil particles.
As the water content is increased, water starts acting as a lubricant, the soil particles start coming closer due to increased workability, and under a given amount of compactive effort, the soil water-air mixture starts occupying less volume, thus causing a gradual increase in dry density.