This is a subject that has many twists and turns.
The usual rule of thumb for NA engines is to start at water injection rates of about 10%-20% of fuel flow. As mentioned above, ADI used in WWII aircraft like the Pratt and Whitney R2800 engine used about 50% of fuel flow, with a mixture of 50% methanol and 50% water, and in extreme cold conditions they also had a mixture of ethanol, methanol and water, if I recall correctly it was about 60% alcohol by volume.
http://www.enginehistory.org/Frank%20WalkerWeb1.pdfWater vapor actually assists in the combustion process, as it facilitates conversion of carbon monoxide to CO2. In lab tests you can take a mixture of dry carbon monoxide gas and oxygen and it is nearly impossible to ignite, but add just a bit of water vapor and it ignites easily. This is one of the pathways that water injection uses to help make more power.
It cools the fuel air mixture by evaporation and due to the high specific heat of water (how much energy it takes to raise a water droplet one degree compared to a similar weight of gasoline). It also takes considerably more energy to evaporate the water droplet, to gas (steam) than it does to evaporate the gasoline droplet.
This means that during the compression stroke the fuel air mixture does not heat up as much due to compression, so the work that used to be spent fighting rising pressure due to heat in the cylinder is spent evaporating the water alcohol mist. This gains engine power by reducing compression losses.
The water does slightly retard the effective ignition due to its cooling effect but in many engines that moves the time of peak cylinder pressure slightly later in the combustion stroke closer to its ideal 12-14 degrees after top dead center for maximum power recovery. Also during the burn phase the water gives back the energy that was invested to evaporate it. It lowers peak cylinder pressure (cooling effect during compression and higher heat capacity), but the steam generated during combustion stretches out the pressure peak so although the peak cylinder pressure is slightly lower the total effective pressure goes up because the pressure does not fall as fast as the piston descends down the cylinder due to waters high specific heat (it has to expand more to cool off the same amount as a normal fuel air charge).
The slightly lower peak cylinder temperature, lowers heat stress, and heat losses to the cooling system, and helps keep valves alive at power levels that would melt them without the water injection.
The evaporative cooling as the fuel air water mist enters the cylinder also increase volumetric efficiency of the engine as the fuel air charge heats up less as it passes the hot head of the intake valve, and cools off hot spots like spark plug electrodes and any other possible sources of pre-ignition.
All these effects allow you to produce more useful work out of the same or even more fuel than you could burn before without killing the engine due to high heat loads.
Larry