Within seconds, you'll see hundreds of tiny air bubbles being released from the nuggets as they are being displaced by the water. Gradually, the dog food will absorb more and more water and begin to swell, very much like a sponge would do. You saw the tiny air bubbles rise through the water. But what you didn't see was how much was given off because it was released into the room. This is nearly the exact sequence of events that occurs when your dog eats plain dry food.
Some dogs chew the nuggets more so than others.
In any case, realize that after eating, the entire contents of the bowl you just fed is now located in your dog's stomach. They drink water. Just remember the glass experiment. You'll remember in the glass example, the air bubbles were released into the atmosphere. In your dog's stomach, the gas has no immediate escape.