In regards to why TPU is not recommended for long term immersion in water, a better understanding of the polymer chemistry is needed.

From Wikipedia:
The final resin consists of linear polymeric chains in block-structures. Such chains contain low polarity segments which are rather long (called soft segments), alternating with shorter, high polarity segments (called hard segments). Both types of segments are linked together by covalent links, so that they actually form block-copolymers.The polarity of the hard pieces creates a strong attraction between them, which causes a high degree of aggregation and order in this phase, forming crystalline or pseudo crystalline areas located in a soft and flexible matrix. This so-called phase separation between both blocks can be more or less important, depending on the polarity and the molecular weight of the flexible chain, the production conditions, etc. The crystalline or pseudo crystalline areas act as physical cross-links, which account for the high elasticity level of TPU, whereas the flexible chains will impart the elongation characteristics to the polymer.
These "pseudo crosslinks", however, disappear under the effect of heat, and thus the classical extrusion, injection moulding and calendering processing methods are applicable to these materials. Consequently, TPU scrap can be reprocessed.
What this means is that when you submerge the TPU in water, water molecules (which are polar) will slowly intercolate into the polar "crystals", and serve as lubricant between chains. This will cause the TPU to become swollen, and cause a loss of the elastic recovery response. How much of an effect this is depends on the exact chemistry of the specific TPU formulation, as they vary greatly.