I will give uit a go...
In general, diesel is excess air system. In order to increase power more fuel has to be supplied. There comes a piont when all air is consummed, more fuel will just create more soot (black smoke). At this point, more air is required. Normally by increasing boost.
By pumping more air and more fuel, the efficiency of the engine is increased due to higher "effective compression ratio". You gas mileage will improve.
Unfortunately, if this contiues, the engine will be under more and more stress due to increase in combustion tempertures and pressures. Knock will rear its ugly head.
This is the only time when water/methanol should be injected or you will loose power. The quantity and ratio of the water/methanol will be determined by the onset of knock. Water slows down flame speed and methanol increases it.
The excessive heat and pressure of combustion is now being utilised to fuel the expansion of steam to perform mechanical work, almost act like a secondary steam engine.
Have a read on
this.