Consider the following two situations, in which case the level of water will be higher?
Situation 1: Salt dissolved in water.
Situation 2: Same amount of water in the beaker with a sponge.
Situation 2
Sponge is a matter, so it occupies space and has mass. When it is dipped in water, it occupies space that was previously occupied by water, so the water level rises. Particles of salt dissolve completely and occupy the intermolecular spaces between water molecules.