Would adding water to a fish tank with sand lower the level of sand?
If your sand is packed in a optimal sphere packing, like a hexagonal packing for example,



nothing would happen to the sand level, because it can't be packed more dense.

If the packing of the dry sand wasn't optimal (which it probably isn't 100%), then the water may help settle it through motion and friction and it would lower a bit. In any case it wouldn't lower so much as that you could easily see it with your eyes.