Yes open would mean no water to complete the circuit, closed would mean water is completing the circuit.
But from your question it seems like your hub detected the sensor as a contact sensor not a water "leak" sensor.
Check which driver it selected on the sensor's "device info" tab. Under Type it probably shows "generic zigbee contact sensor".
It should work fine but if you prefer you can install the driver listed in the screen shot of one of my sensors.
