If you apply it wet, the water evaporates, leaving a film of dry powder all over the area you sprayed. It’s more effective than sprinkling dry powder on leaves, as it will actually adhere to the leaves. It will stay there for quite a while, dry. And bugs hate it… since it dissolves their exoskeleton .
But yes, on the ground, if it gets wet, it turns into a paste of gunk, and you need to reapply it around the plant.