Placing a campfire on top of a sponge block and waterlogging the campfire will extinguish the campfire however if you play water on a campfire which is no loner lit, the campfire is lit while it's wwaterlogged. The water doesn't flow at all.

To Reproduce
1. Place sponge
2. Place a campfire on top of the sponge
3. Place water inside the campfire
4. You will notice that the sponge soaked up the water and the campfire is extinguished
5. Place water again inside the extinguished campfire
6. The waterlogged campfire is lit

Note: Upon falling down a high place, the water inside the campfire will save you but you will take damage from the campfire. When you break the campfire with a silk touch axe, the campfire will drop however the water is gone as it was apart of the campfire. Placing the campfire will not have water.