The article below is fantastic and explains drought stress. This is off of Kansas State’s Turfgrass blog 5/28/13

We talk about “drought stress” all the time, but what is actually going on inside the plant?

Drought stress affects a lot of tree processes both in the short term and long term. Here is a website with a short (5 easy pages), clear description of physiological effects of drought that may help you to better understand what drought stress actually is.

https://warnell.forestry.uga.edu/service/library/for99-010/for99-010.pdf

Here are some “Cliffnotes”, but be sure to read the above link for more details.

Lack of water = lack of turgor pressure, hence the wilting symptom
Stomates (gas exchange pores) close to reduce water loss, but closed stomates = less carbon dioxide for photosynthesis = less food. (During photosynthesis, plants use the sun’s energy to turn Co2 and water into sugars/carbohydrates.)
Trees shed leaves to reduce water loss. In some cases they undergo the organized abscission process, an active plant process in which they draw materials back in and make a separation layer. But in extreme drought they sometimes skip that step, shedding leaves quickly and therefore losing valuable nutrients and other materials.
Reduced growth during the drought year and beyond. The current year’s growth is affected, but to make it worse, the buds set during the drought might have less growth when it is “their turn” to grow into shoots next year. In addition, in the growth ring of the tree, drought stress this year will affect next year’s growth, too. So, growth “upward” and “outward” are affected for at least 2 years.
Susceptibility to insect pests and diseases. Plants produce defensive compounds to protect themselves from attack. When food reserves are low, the plants have less materials available to dedicate to those defenses.

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