Some fungi produce a waxy material during the natural process of breaking down organic matter.  This wax can coat soil particles, especially the large soil particles of sandy soils as well as some gravels.  This wax coating then prevents water from entering the soil, a condition known as hydrophobia or water repellence.

Most of our sandy soils become water repellent as the weather warms up and the soil dries out.  On a sloping site water may simply run off instead of soaking in.  On a level site the water will pool and only soak in a few small areas leaving most of the soil dry.  This is a very common problem in lawns where it leads to dry patches developing.  Many people react to dry patches in their lawn, by applying extra water which, while it may eventually overcome the problem, also wastes a lot of water.