Once you close the valve (which is located about two feet below the ground level, or more), that water that is in the top part of the hydrant drains away into the soil nearby.
If you do not open the valve, and you drilled into the side of the part of the hydrant that is above ground, there would be only air in the part where you drilled the hole, and a rod that connects the top handle part to the subterranean valve.
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