I'm going to elaborate a little more on what others have said. I studied chemistry before I went into nursing and this is what I taught to my students when I taught chemistry labs.

Water has the ability to trap in heat and hold it better than air does. Not only does it trap heat in, but it's also insulated by the plastic in the bottles. So assuming you just open the incubator a little bit (and don't leave it wide open), the warm air is replaces by the cold room air. So when you close the lid, there is heat transfer from the bottles of water (which are about 88*-89* depending on how hot your incubator is) to the air in the incubator. This assists the flexwatt (or whatever heat source you're using) in creating stable temperatures. The more bottles you have, the easier this is to do and the less the temperature in your incubator will fluctuate.