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I understand that the yeast activates, but why does this happen? Is the water simply absorbed into the yeast?

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The yeast rises by fermentation, which is a much more complicated process than passive absorption of water molecules. –  rumtscho May 26 at 21:31
Proposed an edit that I think makes this question a little more clear. I'm kind of surprised we don't have more basic information about yeast available on the site. –  Preston Fitzgerald May 28 at 3:05

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I presume you're talking about active dried yeast. In that case, the granules of packaged yeast have some nutritive content to them, so what you observe when you add warm water is a weak form of priming. Priming is the addition of both warm water and a food source, typically sugar or flour, to dried yeast with the goal of 'waking-up' the yeast from their dormant, packaged state. The warm water dissolves some of the food in the granules and warms the yeast up to a temperature which is favourable to fermentation.

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Q10 (temperature coefficient): en.wikipedia.org/wiki/Q10_%28temperature_coefficient%29 Yeast at 20°C will grow about twice as fast as yeast at 10°C. –  Wayfaring Stranger May 26 at 17:51
Just what i needed. thanks~ –  mylifeisalie May 27 at 0:58

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