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It is more correct to say that air because it compresses dissipates explosions. Water doesn't amplify them, but it is still going to be a lot worse than air.

My guess is water protects from nuclear radiation and they get confused. Anyone else want to guess where the trope came from?

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If you're a diver in the water, the water transmits the shockwave very effectively, and is dangerous.

If you're outside the water, the density difference between air and water acts to diffuse the shockwave.

Water is a really good absorbent of explosive energy (as long as you're not also in the same water).

Well explained. That's why I put scare quotes around "amplify" - but I couldn't find a better way to state it.

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