While washing clothes, we are used to thinking that more soapy water would clean better. Adding more water feels wrong because it reduces the 'soapiness'. Does adding more water actually decrease the cleansing action, or is it just an illusion?
The washing power (or liquid) works due to the surfactant it contains. The surfactant has to do two things:
detach the soil¹ from the fabric
suspend the soil in solution so it doesn't redeposit on the fabric
The ability of the surfactant to do this is roughly related to its chemical potential. For very low concentrations the chemical potential is proportional to the concentration, but surfactants are unusual in undergoing a phase change to a micellar form at quite a low concentration called the critical micelle concentration (CMC). Above this concentration the chemical potential plateaus, and as concentration increases the chemical potential increase much more slowly.
So to achieve the best wash you need to keep the surfactant concentration at or above the CMC. In practice you want it to be above the CMC as in washing machines the kinetics of surfactant adsorption and soil removal are important and increasing the concentration does speed up the rates even above the CMC.
Adding extra water doesn't make that much difference during the wash phase as once the soil is solubilised it's off the fabric and will be removed in the rinse stage of the wash. There is a limit, but as long as there is enough water to get the soil off the fabric then adding extra water won't make much difference. In fact extra water might dilute the surfactant concentration to below the CMC and harm the cleaning performance.
Several decades ago I worked as a colloid scientists for the multinational company Unilever, which makes washing powder (and ice-cream). I didn't personally work on washing powders though I did study some related background science. The dosing instructions on your washing powder have been carefully selected to give an optimal tradeoff between performance and cost. Unless you are in a position to measure the surfactant concentration yourself it's best to just follow the dosing instructions.
¹ for washing powder scientists (yes, such people exist!) the term soil means anything that dirties clothes i.e. grease as well as dust or clay.