We do store water in our fat. Dry fasting will cause your body to more aggressively break down the fat to get this water. Unfortunately, your body won't/can't always break down fat.
In Russia there are dry fasting resorts that allow people to fast without drinking water for 7-11 days under medical supervision. Most people do it for medical conditions, but some indeed as a way to quickly drop weight. Note that such fasting does not avoid all contacts with water. People still bath and brush teeth.