Water, by its nature, is the ultimate solvent. It reacts, albeit slowly, with nearly every element there is. It is a part of , and is absorbed all foods, and breaks down the food tissues, be they meat or vegetable. It is the water in meat, mixed with enzymes that tenderize the meat tissue. Heat speeds the process.
Oils tend to be absorbed less, and don't break down as many substances as do meats. And the substances that are dissolved in oil are things like oil soluble vitamins and such.
Frying with oil cause two reactions. First, oil does not mix with water, especially when heated. Mix hot oil and water and it creates a violent reaction. The water becomes super-heated and litterally explodes. The same kind of reaction occurs when you pour water into acid. The sizzling you hear when frying foods is the result of that reaction. The hot oil contacts the moisture located in the outer layer of the food and superheats that moisture. The water can't boil away the heat energy and pops, or explodes, expanding vioplently, sometimes splashing hot oil all over the place. AS teh water vaporizes into steam, it is replaced by the oil, which is then free to heat the food sufficeintly to create the Mailliard Effect spoken of by Michael. The food browns, with the natural sugars and protiens changing both color and flavor.
Super-heated water can be obtained by heating the water in a very smooth container, in a microwave. Bubbles can't form and the water heats beyond the boiling point. If you add something to the water, or disturb it by, say, stirring it, the water boils suddenly and violently, sometimes splashing the scalding liquid all over the place.
If you took this super-heated water, and dropped an uncooked french fry cut potato into it, the potato would cook faster, but there would be not crisping, or browning, as the outer layer of water would never be replaced by the oil, and would reamain in the potato, as it would if the spud were boiled in water.
Also, hot air will not produce the same soft and crispy texture obtained by frying. You have probably eaten oven roasted potatoes before. Try this experiment. Take two potatoes and cut them into wedges. Sprinkle oil and seasonings on the first batch of potato wedges, and just seasoning on the other batch. Place them both on cookie sheets and bake in a 400 degree oven for 35 to 40 minutes. You will notice that the spuds that have had an oil coating brown better and have a more crispy, yet tender skin than the spuds without the oil. Hot air will brown the potatoes, but will toughen the outer layer, drying it out and not replacing the moisture with anything else.
Manufacturers have tried to duplicate the frying process with ultra-powerful microwave energy, theororizing that the high energy will flash-fry the potato chips, giving them a no-fat alternative to the fried chip. They found that the chips became tough and rubbery rather than light and crispy. They wer, however, able to overcome the problem by lightly spraying the chips with oil before nuking them. The oil was necessary to replace the lost moisture. The potatoes basorbed less oil than when fried, but still became light and crispy.
So you can see that oil serves multiple purposes in the frying process. It keeps the food from drying and becoming tough; it browns the food surface, and it adds flavor. It also makes some nutrients available to the body that would otherwise be lost.
Too much oil is bad for you. It is packed with calories and not much else. It may also contain cholesterol and contribute to coronary issues if abused. But when used properly, it is a valid and deliscious cooking substance that can't be duplicated by other means of cooking.
Oh, and if you are wondering why steaks and other meats cooked on the grill develop that same mailiard effect when they are not fried, remember that fat melts into oil and bastes the meat surface as it's cooking. Try grilling a very lean piece of meat or poultry, without covering it in any sauce and leaving it open to the direct heat and air. You will end up with a very dry and tough piece of food, with no nicely crisped surface. That's why the term "well-marbled" si synonomous with great grilling. You need the fat to obtain quality grilling results for direct cooking without added sauses, mops, or cooking in foil.
Seeeeeeya; Goodweed of the North