The diaphragm is a one-way valve intended to allow exhaled gas to be exhausted into the water while preventing the water from entering the regulator - and your mouth. A "wet" regulator is one that allows water to pass the diaphragm into your mouth. Typically this will only happen when the diaphragm is fouled by a piece of crud or when the diaphragm is placed in a unusual operating position, such as upside down.
Many regulators will allow a small amount of water to enter the breathing chamber with each breath, however your orientation means that the water stays in the chamber and is expelled on the next exhalation.
Only rarely do recreational divers have a problem with a regulator breathing wet, but it can happen. It's not usually a flood of water, more like an obnoxious drip, but it can be aggravating as all get out. If you want to experiment, next dive try carefully rolling over on your back while breathing and see if you don't end up with a little water in your mouth. Be careful, you don't want to choke, but there's a pretty good chance you can make it happen to some extent.
Steven