Borrowed from Dave's Naked Scientists explanation: http://www.thenakedscientists.com/HTML/content/kitchenscience/exp/water-...

What to do

1. Put your finger over the hole and fill the bottle up with water.
2. Shine the torch through the bottle at the back of the hole.
3. Remove your finger from the hole and move it down the stream of water.

If you can put a short straw into the hole, you'll get a smoother flow of water than just through the hole alone.

What may happen

You should notice a spot of light on your hand while it is in the stream of water even though it must have gone around a corner to get there. It tends to work best when the water comes out quite slowly.

What is going on?

To understand what is going on here it helps to do another experiment. Fill a transparent bowl with water, put something in the bowl and then look upwards at the bottom of water.

If you look at the bowl from the top you can see the spoon at the bottom.

Looking upwards in the bowl of water you see a reflection of the spoon at the bottom of the bowl in the surface. The water is behaving like a mirror.

So light will reflect really well off the inside surface of water at a relatively small angle.

This means that if you shine the light into a tube of water whenever it meets the side it is reflected so the light stays within the water until it hits your hand lighting it up. This happens even if the water goes around a corner.

What has this got to do with fibre optics?

Optical Fibres

If instead of making the tube out of water you use very very pure glass and pull it to a thin flexible fibre, when you shine light in at one end it will come out of the other. By getting the right design of fibre the light can travel through up to 50 km of fibre and still be detectable. You can then send signals through the fibre by flashing the light on and off again a bit like morse code, and if you can flash the light very fast you can transfer huge amounts of information. The record is now (Dec 2011) nearly 200 gigabits per second down a long-distance optical fibre connection (http://www.bbc.co.uk/news/technology-16174972). Because they are so good at transmitting data optic fibres move most of the data around the world (internet traffic, phone calls etc.) and you are almost certainly reading this via one.

If you make the tube out of plastic rather than glass it is more flexible and safer, and you can use it to make the artificial Christmas trees with the tiny pin pricks of light.

Why do you get such a good reflection from the surface of the water?

Light goes more slowly in water than in air and whenever light changes materials and the speed changes it will be bent (refracted). When it moves from a slow material (like water) to a faster one (like air) it is bent towards the surface.