There are many things to know about oil, and particularly hydraulic oil. One is, water can only enter a hydraulic system when there is minimum oil pressure to keep it out. The most common way is via the reservoir breather or filler cap. This occurs when oil is being pumped out as normal and air is drawn into the reservoir to take up the void by the drop of oil level. If the air drawn in has a high humidity, water droplets can condense on the inside of the reservoir and may gradually sink to the bottom. This is most prevalent with relatively large single acting cylinders using a large amount of the reservoir's capacity each stroke.
Consider also, after a big workday and a hydraulic system is very hot, most of the space in the reservoir, other than oil, is mostly hot air and oil vapour. Now imagine at the end of the day, the system shuts down and the oil cools down to cold, and now also so does the air and the oil vapour condenses back to a liquid. So what then happens. Air pressure in the reservoir drops below the outside air pressure, and so cold, moist air is drawn in (technically forced in) and condenses on the inside of the reservoir.
But the good news is, once the oil in the system gets very hot again the next day, (assuming it does), the water held in the oil is heated up and boils off as a vapour.
Some systems do have good quality breathers that not only keep out dust etc. but also moisture.
Always check the breather as part of your maintenance regime.
Note also, it is emulsifiers and additives, if and when added, in the hydraulic oil that allow oil and water to mix, which is seen as white or milky. So that clear water does not necessarily sit on or go to the bottom, unless there is heaps.
