http://www.graciemag.com/?c=150&a=4147
Wrestling, MMA, boxing, all of these sports still cut water before a weigh in. They do it because it lets them have more physical mass then the weight class allows.
If the weight limit was say 200 pounds. If I weigh 210lbs normally but then drop 10lbs of water I can pass the weigh in. Now I'd have an extra 10pounds of muscle, a big advantage.