Mostly dry
Having a wooden boat makes this question a little different. Salt water can never harm a wooden boat but fresh water will, every time, and that is exactly what sweats or condenses on the inside of the planking and then runs to the bilge. Since my hull is so swollen up with oil that there is no leakage at all, it is necessary for me to flush the bilge periodically with salt water (to keep her "sweet" as the (really) old timers would say). But I don't mind a little water getting in under the engine via the stuffing box or leakage at the waterlock. IMO fibreglass boats should be kept as dry as possible for reasons already noted.
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