The Hydro-tech foam pads have closed cells, this makes it more difficult for liquids (polish) to be absorbed deep into the pad. This keeps your polish on the surface of the pad, saving you on product. I think the reason that you should only use water based polishes with these pads is because, since it's hard for the polish to be absorbed, it's also hard to clean it out.
The pads are great, excellent cut and they still finish nicely, but you have to be very careful with them or the backing will separate from the foam, unless they've fixed the adhesive problem