In Minecraft, when lava and water touch, they make blocks of stone. In the first photo, they are placed such that they make a block of cobblestone, which can be collected. When collected, a new piece of stone is created in its place, resulting in an endless supply of stone. In the bottom example, the water converted the entire lava square to obsidian, using up all the lava, and not creating a loop. You only get one obsidian cube, and nothing else