One knowledable sounding person answers: “Water provides more resistance to physical motion (vibration, in this case) than does air. So the motion is slowed as you immerse a vibrating tuning fork in water, lowering the perceived pitch. And increasing it’s perceived volume, were you to have one ear under the water!
That same density accounts for the fact that vibration is more readily transmitted over distance also. As the molecules are closer together in water (or wood!) than air, they are (statistically) more readily affected (excited) by their neighbors….”
But its important not to confuse the vibrating instrument versus the medium it exists in….
The above image is from a sound art exhibition by David Birchfield – Sustainable: a dynamic robotic sound installation. Follow that link to see some quicktime videos of the installation…