This Optical trick demonstrates a few different aspects of optics, for example, refraction. When light changes the medium through which it travels, it refracts/bends. In this particular demonstration, the light must travel through the glass, the water, the back of the glass and the air before hitting the arrow images on the paper behind. Every time the light changes mediums it refracts. Refraction however, is not the reason for which the direction of the arrow is reversed when the glass is filled with water. The water causes the incident light rays to focus at a certain distance from the glass of water (in this case, this can be identified as the focal point) however, beyond the focal point the rays have continued and stretched in their original direction, the light rays that were once traveling on the left are now found on the right and vice versa, this is why the arrows appear to be reversed.