Gluten cannot be developed without moisture, so liquids are essential to the baking process.
Pie crusts provide a good illustration of how liquids function in baking. If too much water is incorporated in a pie dough, a lot of gluten develops and the crust is tough. If no water at all is used, no gluten develops and the crust does not hold together.
Some of the moisture in doughs and batters changes to steam during baking. This contributes to leavening.
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