If RBC (blood) is mixed with distilled water or a sufficiently hypotonic solution, RBCs absorbs water, swells and bursts, releasing most of their content. This is called haemolysis. RBCs absorb water by the process of osmosis, ie, it is the movement of solvent particles from the region where their concentration is high to region of low concentration through a partially permeable membrane.
If blood is mixed with hypertonic solution RBCs lose water, shrink and become created. In isotonic solution they remain unaffected.