Hydrostatic shock is the effect commonly believed to be caused by a high velocity object entering a body, such as a bullet fired from a weapon.

The shock is described in the following way—the object will cause ordinary damage by the actual penetration, but also pass a shock wave in the surrounding tissue due to the energy of the slowing object being passed into the largely liquid material of the body (65%+). The shock wave, or sometimes competing shockwaves from multiple impacts, are believed to cause greater damage than the object itself, sometimes enough to rupture internal organs and fracture bone. Especially large objects are believed to cause hydrostatic shock by the closure of the cavity created by the object's passage.

There is a body of opinion, however, that believes hydrostatic shock is arrant nonsense. The argument is based around how energy is transferred and the effects of such a transfer. Issues raised include kinetic energy vs. momentum, the rate of energy transfer, thermodynamics (kinetic energy would be transformed into heat), the speed of sound in tissue, hydrodynamic effects, 'wound tracks', and the nature of a body.

Testing in recently killed pigs (soon enough that no loss of muscle elasticity or rigor mortis could occur), shows that large amounts of tissue distruption from spherical projectiles only occurs at striking velocities somewhere between 2,500 and 3,600 feet per second (800 and 1100 m/s). A velocity of 764 m/s (2507 ft/s) resulted in a hole barely larger in diameter than the 6 mm projectile used, while a velocity of 1116 m/s (3661 ft/s) produced a 20 by 25 mm hole in muscle. (Fackler, et al)

Some sources attempt to compare inelastic media, such as fruit and water jugs, to people, saying that the massive "splattering" effect also occurs in living flesh. This is totally contrary to the known laws of physics.

If an exerted force exceeds the tensile strength of a material, deformation and tearing occur. Because water effectively has a tensile strength of zero, any force exerted on it will deform or "tear" it (cause it to splash), discounting the effects of gravity. Human muscle tissue, however, has a tensile strength of roughly 1 to 4 MPa (145 to 580 lbf/in²); other tissues may be weaker or stronger. If the force of the "hydrostatic shock" exceeds the tensile strength of the tissue struck, then stretching or tearing of the bullet hole can occur. Lesser forces will still displace tissue, but not hard enough to cause any damage other than bruising due to blunt trauma.

References

http://www.btammolabs.com/fackler/wounding_mechanism_projectile_shape.pdf