Dry drowning defined by Web MD:
Translation: the water in the lungs decreases the hearts ability to move oxygen into the blood thereby causing the victim to slowly asphyxiate which results in heart failure, brain death, etc, etc.
Dry drowning is basically drowning without water. With dry drowning, you are not drowning from an immediate immersion in water; it is more of a delayed effect of a small amount of water in the lungs. This can result in laryngospasms, which minimize the amount of water aspirated into the lungs. Respiratory arrest may follow, leading to an inadequate supply of oxygen in the blood, cardiac arrest, and eventually brain death.
Several other mechanisms can cause dry drowning, including acute respiratory distress syndrome (ARDS), which is an acute, severe injury to most or all of both lungs or electrolyte abnormalities resulting from a dilution of the blood after aspirated water is absorbed into the blood, leading to heart rhythm abnormalities.
eHow has an article on how to spot symptoms of dry-drowning here: