All the water separation happens in the head design of the snorkel. Basically the bottom of the head is bigger than the main pipe going down the piller. The smaller pipe goes up higher inside the head and the bottom of the head, where it shrinks down to meet it a couple of inches further down, has slots cut into it to drain the water out. Due to the 90* bend at the top of the head it forces the water against the wall of it so it drains away from the main air stream.
I hope that makes sense without a drawing. I had to explain the same ting a few weeks ago to someone that made a snokel using PVC pipe here.
http://www.4wdmonthly.com.au/forum/index.php?board=18;action=display;threadid=11077;start=50