Hello,
In the video the material I processed was known to contain some silver and for this reason I diluted the solution with two or three times it's volume of water to precipitate any silver chloride that may have been dissolved by the concentrated acid.
About the time I filmed the video you are talking about, GSP had posted how he had done some testing with silver chloride and determined that the solubility of silver chloride in acid can be reduced by diluting the solution.
If your source material did not contain any appreciable amount of silver you can skip this step. When refining your gold powder a second time after washing you can skip diluting also.
You will know when you had some silver present after dilution as the clear solution will cloud up when the water is added. Excessive copper I chloride (CuCl) can produce the same effect as it is soluble in strong acid, but precipitates in dilute acid. If you see this cloudiness when water is added, be sure you filter the solution again until it is clear and free of sediment or particulate.
Another aspect of dilution is drag down. Harold has spoken of this on numerous occasions. Dilution thins out the contaminates in the solvent which could help reduce drag down. Drag down is caused when the solution is trapped inside and on the surface of the gold sponge/powder as it drops.
If your solution is extremely saturated with gold you will need some water for the SMB to produce the SO2 gas that precipitates the gold. If you use SO2 gas directly this should not be a factor. Dissolving the SMB in water before adding it the pregnant solution can achieve easily this.
Perhaps GSP, Harold, and others will have more to add.
Steve