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First time I hear about "microdieseling" in hydraulic systems.
I know about cavitation , which is harmfull. The same like localised oil burn when passing narrow orifice under high pressure.
And water in hydraulic oil is a big "NO". Will damage pumps and motors.

Traces of water can be found in every oil. Even fresh oils are not absolutely water-free but contain between 15 ppm (insulating oils) and 400 ppm (engine oils) of water.
The following water contents are generally considered typical and tolerable:

Fresh oils    250 – 400 ppm
Gear oils    1000 – 2 000 ppm
Hydraulic oils    500 – 800 ppm
Engine oils    800 – 1800 ppm

Types of additives
For lubricity:
Friction modifiers or friction reducers, like molybdenum disulfide, are used for increasing fuel economy by reducing friction between moving parts.[6] Friction modifiers alter the lubricity of the base oil. Whale oil was used historically.[7]

Nanoparticle flakes from the oil additive TriboTEX. Image taken with electron microscope showing the nano scale.
Extreme pressure agents bond to metal surfaces, keeping them from touching even at high pressure.
Antiwear additives or wear inhibiting additives cause a film to surround metal parts, helping to keep them separated. Zinc dialkyldithiophosphate[8] or zinc dithiophosphates are typically used.
Nanoparticles that build diamond-like carbon coatings, which improve embeddability and can achieve Superlubricity. The technology is developed with Argonne National Laboratory and Pacific Northwest National Laboratory and the foundation of TriboTEX product.[9] This technology was featured by NASA Spinoff Magazine for it properties to improve longevity
Inorganic Fullerene-like Tungsten Disulfide (IF-WS2) nanoparticles with a hollow sphere (Fullerene-like) morphology, provide extreme lubricity, anti-friction and high impact resistance (up to 35 GPa).

Any hydraulic oil normally contains small amount of water dispersion.

What substance removes water from refrigerator compressor oil?
But the water remains in the refrigerator system. What is the substance?

But why motor oil manufacturers sometimes add molybdenum sulfide to the oil, and this is not bad for engine.
https://en.wikipedia.org/wiki/Oil_additive