One reason for the myth about dehydration would be due to "drinking plenty of water" still being one of the most effective things to do: If it's about the liver breaking down alcohol into toxic Acetaldehyde, drinking lots of water to flush it out.
Understandable mistake to go from "more water fixes the problem" to "problem must've been not enough water (dehydration.)"
This was how it was discussed in my university chemistry class. Also mentioned: a similar breakdown (same enzymes or whatnot) happens with methanol, and the breakdown products (formaldehyde and then methanoic acid) are stronger / more toxic than those of ethanol (acetaldehyde / acetic acid.)
If it's about the liver breaking down alcohol into toxic Acetaldehyde, drinking lots of water to flush it out.
How? I'm pretty sure that contrary to popular belief, water can't simply be used to flush stuff out, the metabolite also has to be in a form that can be excreted by the kidneys, and even then extra water might have no effect whatsoever. This is basic physiology found in any textbook on the subject.
I tried to google if kidneys might excrete some of the acetaldehyde, but found no answer.
If it's worth saying, but not worth its own post (even in Discussion), then it goes here.