Our flesh is squishy. It has some elasticity and will eventually return to its original shape/position when displaced, but this doesn’t happen instantly. Think of gently bending a piece of soft plastic – it’ll stay bent for a while, but slowly it’ll return to more or less its original shape.
The water retention you’re thinking of is an abnormality called edema, which is a clinical condition potentially caused by increased water retention. Because there’s extra water, the flesh swells up, and indentations become more prominent (this is known as pitting edema, because pressure forms pits).
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