From the book: Filtration Technology

The amount of contaminant in a system varies by location as well as time. Besides external factors, the contaminant level at any location depends heavily on the type and number of components used.

In some systems, the fluid flows past a given point only once. The fluid may be consumed in the process, or packaged at the end for later use. If not consumed or packaged, spent fluid may be discarded, or it could be reconditioned off-line to become essentially new fluid. These are single-pass systems. Examples are fuel systems, pneumatic fluid power systems, and beverages bottled for consumption.

In such a system, it is convenient to think in terms of a linear process in which contaminant levels vary by location. A certain amount of contaminant may be present at the start of the process, typically entering the system with the original fluid. A certain amount of contaminant will be added due to wear in system components. Filters or separators may be placed near the end of the process to remove some contaminants.

More about Filtration Technology

Water is a devastating contaminant to both oil and equipment. Here are some interesting effects that water has:

Effects of water on equipment:
  Rust and corrosion of machine surfaces
  Water etching/erosion, hydrogen embrittlement
  Oxidation of babbitt in bearings
  Loss of oil film or hard water deposits
  Lack of lubrication due to filter blocking or freezing

Effects of water on oil:
  Accelerates oxidation of the oil
  Depletes oxidation inhibitors and demulsifiers
  May cause some additives to precipitate
  Causes ZDDP anti-wear additive to destabilize over 180 degrees F
  Competes with polar additives for metal surfaces

Here are some things to consider when trying to decide whether to use fiberglass or cellulose filter media:

Fiberglass
  More pores per square inch
  Consistent pore size and dirt holding capacity
  Higher dirt holding capacity
  Tolerant to high temperatures

Cellulose (Wood pulp)
  Large fiber diameter takes up space that could be used for particles
  Inconsistent pore size
  Absorbs water
  Subject to fatigue and high temperature failure

The difference between foam and air entrainment is that foam consists of air bubbles greater than 1 mm in diameter that rise to the surface of a fluid. Air entrainment refers to bubbles less than .5 mm that remain suspended in the fluid.