There are many different clay minerals. The "expansive clays" are the ones that swell or shrink depending on the water content. It is NOT like water added to a jar of sand particles or silt particles. For these clay minerals, the water becomes part of the actual mineral structure.
All of the ancient pottery is made from these types of clays. As a clay vessel dries, it also shrinks - making it stronger. If it dries very slowly and evenly with no cracks it can be placed in a kiln and become MUCH stronger when fired.
Clay layers in your soil or your dam get very hard when they dry out very slowly. I tried to dig some test pits for a pond on my farm during our extended drought. When I tried to dig in the areas with a clay layer just below the topsoil, I couldn't even get the teeth on the mini-excavator bucket to bite - that crap was so hard. Lesson learned!
