he has a series of 5-6 glasses small to large, the small one is full of milk. When he pours the small glass into the next big one it fills it and then he pours that into the next biggest glass and that also fills it and so on up the line. The largest glass is then used to refill the small ones thus demonstrating that more liquid is indeed created.
I think the glasses already have water in them which is concealed by the pattern. The fluid is not milk but something that has white pigment in it. As the liquid goes from glass to glass, the pigment is diluted by the hidden water.
I think the glasses had a double skin, making it appear full when actually the milk was between the two. Reversing the procedure would be done by pouring the milk into the inner part of the glass. Apologies if this sounds complicated but you know what I mean!