Think about what happens in the developer when you don't agitate the solution. The developer becomes partly exhausted and weaker in the areas where development is strongest - where it does the most work. Also, bromide and iodide, restrainers, are released in these areas. When you agitate, you bring fresh developer to all areas of the film, so development is more even. This affects contrast, grain, and acutance. Convection currents in the developer and other things that cause migration of the developer constituents moderate and change these behaviors, too. Agitation is generally needed to produce reliable, even development.
A similar thing happens with increased dilution. The developer becomes exhausted more easily in local areas where development is greatest. The other components, such as sulfite, are also reduced in concentration and have lesser effects. One of the most important effects of greater dilution is lower contrast. While that is also true of reduced development time, the effect does not seem to be exactly the same.
I'm sure this is not the entire story, especially for dilution, but it is a start.