Moisture plays an important role in composting process. Too dry or too wet are both unfavorable for the compost. You can test by hand and then adjust the content by turning or adding materials.
Organisms that help with the breakdown of the compost need water to survive. Micro-organisms live in the thin film of water on the surface of the compost particles. They use the water to move from place to place and can only utilize organic molecule that are dissolved in water.