This:
Because it has no source it ceases to exist because it has no source.
Each block in a water stream has a "depth" level and each block looks at the blocks around it and says, "what should my depth be? If I am next to a source block, 8, otherwise 1 less than the maximum I see around me."
You placing a non-source block into the world does this check and finds that its depth should be 0. Depth 0 is air. It sets itself to air.
Because each one sees an adjacent water block with a depth value and each one decrements their depth value by 1 each tick.