The reason I said that is because it is my understanding that the standard packing used in the typical stuffing box needs the water it keeps out to keep itself lubricated and swollen. I’ve seen old dried out packing, it’s usually in pieces.
I guess what you are describing above the water line uses another type of packing? and it’s called a stuffing box? Who knew ;) I’m too literal, ugh.
And no, I have never had the pleasure of attempting that chore in the water. I race OPB’s (Other Peoples Boats)
The packing is usually a woven cord like material that is infused with a wax like lubricant. It can be used for shafts or rudder posts.
You are correct that it swells as it gets wet, which helps to further seal the shaft. That is the old stuff; there are newer types of packing that are dripless. Or, you can replace the packing gland altogether with a dripless shaft seal.
If it sounds like I spent too much time in the bilge adjusting packing you’re right. :) Boats are an expensive hobby so it pays to do as much of your maintenance as you can.