It turns pink/red when submerged. The red x's are dye pigment and saturate the fibers ont he white when wet. If you look closely the thing looks plastic from the outside. So it has to get quite a bit wet to trigger it. A hot shower won't do the trick. You're all safe.
Is the water damage indicator visible through the tiny hole immediately to the left of the SD card? Because my phone is 2 days old, and the red x's are bright and easily visible.
i have gotten my droid incredible wet and the water indicator comes white with red ex's once it has seen "enugh" moister it turns red with the red x's.