The conductivity of a solution by definition at any given concentration is the conductance of one unit volume of solution kept between two platinum electrodes with a unit area of cross-section and at a distance of unit length.

G=

Where

G is the conductance

κ is the conductivity

A is the area of cross-section

l is the distance between the platinum electrodes

Now, the addition of water dilutes the electrolyte. The number of ions in a given volume decreases and conductivity also reduces.