Dry hose = cylinder starts empty (lower numbers on bottom, higher on top), customer pumps whatever gas they want to buy into cylinder and drains it into the car. Cylinder is usually "dry" unless someone is buying gas.
Wet hose = Cylinder remains full between customers (lower numbers on top, higher on bottom) and customer drains however much fuel they want from the full glass cylinder down to the level they want to buy. Cylinder is "wet" because it always contains fuel that is ready for purchase.
At least this is my understanding of it.