Why does alcoholic KOH prefer elimination whereas aqueous KOH prefers substitution?
In alcoholic solution, the $\ce{KOH}$ is basic enough ($\mathrm{p}K_{\mathrm{a}} =15.74$) to deprotonate a small amount of the alcohol molecules ($\mathrm{p}K_{\mathrm{a}}= 16–17$), thus forming alkoxide salts ($\ce{ROK}$). The alkoxide anions $\ce{RO-}$ are not only more basic than pure $\ce{OH-}$ but they are also bulkier (how much bulkier depends on the alkyl group). The higher bulkiness makes $\ce{RO-}$ a worse nucleophile than $\ce{OH-}$ and the higher basicity makes it better at E2 eliminations.