>>10082847oxygen atoms in water molecules are in a more reduced state than in molecular oxygen (O2). The tendency of molecular oxygen to be reduced (and thus oxidize something, like hydrocarbons) is what drives combustion reaction (together with an increase in enthropy, primarly due to CO2 formation).
H2O is the product of combustions in oxygen-containing atmospheres, thus increasing product concentration (adding water) displaces the reaction in the direction of it's reactants (inhibits the reaction)
Also, due to it's large heat capacity, water absorbs heat generated in the combustion reaction, which is necessary to maintain the chain reaction (heat from already combusted molecules furnish the activation energy for further reactions to occur).
Besides that, there's the fact that molecular oxygen has low solubility in water, so adding large amounts of water reduces the amount of oxygen available to combustion reactions.