Makeup sponges are almost always used damp, and the instruction is repeated without explanation. The reason is a straightforward matter of absorption and deposit.
A dry sponge drinks the product
A cosmetic sponge is an open-cell foam, meaning it is full of interconnected voids that readily take up any liquid they contact.
Applied dry, it absorbs a large share of the foundation into its interior, where it is unavailable to the skin and is eventually washed out.
The obvious consequence is waste, and the less obvious one is inconsistency, since absorption slows as the sponge fills and the deposit rate changes mid-application.
Water occupies the space first
Wetting the sponge and squeezing out the excess fills those internal voids with water, leaving little capacity to absorb anything further.
Foundation then stays largely on the surface of the sponge, where it can be transferred to the skin rather than lost inside the tool.
This is why a damp sponge appears to make a small amount of product cover more area, when it is really wasting less of it.
Bouncing deposits, dragging removes
The recommended stippling motion presses product down onto the skin and lifts away, depositing a thin layer with each contact.
Sweeping the sponge across the face instead pushes product sideways, moving it out of some areas and piling it into others.
The bouncing action also presses product into surface irregularities rather than bridging over them, which is what produces the appearance of a thin, even film.
The water thins the layer as well
Some water transfers from the sponge into the foundation during application, slightly diluting the film and making it sheerer and more flexible.
The result is lighter coverage than the same product applied with fingers or a brush, which is why sponges are associated with a natural finish.
Anyone wanting fuller coverage from the same product is usually better served by a different tool than by building repeated layers with a sponge.
Why the tool needs cleaning often
The same open structure that holds water also holds residual product, moisture and skin cells after use, which is a favourable environment for microbial growth.
Sponges are frequently stored damp in a closed bag, which extends that period considerably compared with a brush that dries in open air.
Washing after each use and allowing the sponge to dry fully is the practical response, and a sponge that has torn or discoloured has reached the end of its use.