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I read Endure (2nd ed) by Alex Hutchinson recently and it goes into amazing detail on lots of things based on the authors research into published papers.
The main thrust of the hydration argument is that people often end up better hydrated at the end of a race than at the beginning, despite only drinking a nominal amount of water during the race.
The main reason is that glycogen, the main store of energy in the body, is stored alongside 3-4 times as much water (e.g. 1g glycogen to 3-4g water). As your body frees up the glycogen to burn, the water is released into your blood stream.
Could you have over hydrated? You can only absorb so much water per hour (was told something like 700ml but don't quote me on that) so if you drank a lot all in one go then it will just pass through and not do as much good as the same volume spread over a longer time.