A dilution is when the concentration of a solution is reduced. The reason that the addition of water to condensed soup is a dilution is because there is no soup present in the water that is being added.
When a solution, the condensed soup in this case, is mixed with a solution with a lower concentration than itself, which is water in this case, the process is dilution because the final concentration is less than the original concentration.
Contrarily, if the original solution is mixed with a solution with a higher concentration than itself, and the final concentration is higher than what we started out with, then the process is a concentration.