Why does hot oil fry things, but hot water does not?
Oil can get hotter than the b.p. of water, 373 K.

The browning (decomposition) of starches proceeds very slowly (perhaps years for a noticeable change) at 373 K. In addition, the water in the potato will not evaporate away, since the potato is in water (not the water vapor above the liquid, which can be hotter than 373 K).
Since the cooking oil is hotter (e.g. 440 K), starch decomposes (caramelizes) in a few minutes, and dehydration makes the chip crunchy. Bon appétit!