Why does the word water have a different meaning on Earth and Twin Earth in Putnam’s thought experiment?

In Hilary Putnam’s Twin Earth thought experiment, the word water has a different meaning on Earth and Twin Earth because of his theory of semantic externalism.

Putnam argues that meanings are not purely mental entities, such as beliefs or images, which are located "in the head." Instead, the meaning of a term is anchored in the external reality to which it refers. In the experiment, inhabitants of Earth and Twin Earth have identical mental lives and associate the word water with the same descriptions (e.g., "the clear liquid that fills the oceans"). However, the substance on Earth is H₂O, while the substance on Twin Earth is a different chemical compound, XYZ.1

Because the term water refers to the specific substance "out there" in the external world that a speaker points to, the difference in the underlying chemical reality results in a difference in meaning. Thus, even when speakers share identical mental states, the reference—and therefore the meaning—is determined by the actual environment.1