A DIY capacitive water level transducer using brass plates is experiencing unexpected capacitance readings when immersed in water, attributed to the conductivity of the water and the formation of gas bubbles on the electrodes. The discussion suggests using AC instead of DC to prevent polarization and bubble formation, which can affect measurement stability. It is recommended to take brief measurements using a microcontroller to minimize the time the electrodes are energized, thereby reducing bubble formation and improving accuracy. Participants also discuss the possibility of using heat shrink tubing for insulation and the implications of using resistive measurements instead of capacitive ones. Ultimately, the consensus is that the sensor can function effectively as a resistive transducer, with the resistance decreasing as the water level rises due to the conductivity of the water.