Smoking wood goes through a chemical process as it releases its latent energy and flavor compounds. If the process occurs too quickly, you get a dirty smoke and creosote. Burying the wood in the charcoal allows the chemical process to occur more slowly in a restricted O2 environment as the wood preheats and smolders, carbonizing the nasty stuff then releasing the desireable flavor compounds.
Water is not part of the fire triangle, but can have a similar impact to burying the wood because the water has to boil away, but it will only heat the wood to 212F. Then, depending on your fire and the wood placement, you may or may not get clean smoke.
But, give soaking the wood a try and let us know your results. Worth a try.