Glycogen is a molecule that helps the body store glucose for use later with digesting carbohydrates and accessing sugars. Yes, we need sugar in order to process carbs into sugar. These molecules often have water attached to them as well. When we start a lower calorie eating pattern, a goodly portion of these ready-to-use glucose stores get flushed. This is because we are eating less carbohydrates and thus are digesting less carbohydrates. Our bodies adjust to this new lower-carb lifestyle by reducing the amount of Glycogen/Glucose/Water stores we have in our Liver, Muscles, and Fat, which results in the initial "Water Weight" loss of any new diet.
I now have my answer as to Why I was loosing so much weight! :)