Reorganized is a better word.
Wasn't me. And by the way, this means nothing. Another example of this is D. Melanogaster mating with D. Yakuba. Big deal; they're unlikely to create viable offspring due to post-zygotic mating barriers. Nothing is being 'diluted,' whatever you mean by that.
You are diluting it, but not entirely. Let me add some detail but still keep it really simplistic.
Basically, under the right conditions (reducing atmosphere, lightning, whatever) you form organic (organic simply means containing carbon) molecules that are polar on one side and non-polar on the other side. In an aqueous solution, the non-polar sides get pushed together and you get a very rudimentary membrane, allowing some separation. This means you can do things inside your membrane that couldn't go on outside. Once you have something that reproduces itself, like some self replicating RNA enzymes ('ribozymes') the cat's out of the bag and whatever replicates the fastest sticks around.
If you're at a loss, let me explain. Something that reproduces asexually can very quickly 'fill up' a niche that it is well suited to. Any change in that niche that makes it unfavorable for one of these creatures makes it unfavorable for all of the creatures since they're basically clones, and they
all die.
And clearly environments change over time. Life is basically adapted to survive stressors. So, some mechanism that enhances variation among a species was highly selected for - since everything else died out once the environment changed.
Or, some creature multiplied so fast mutations became significant and added to the variation. Viruses and bacteria are like this; mutations add a lot of variation to a culture of bacteria because they reproduce something like once every couple hours.
Although bacteria can also reproduce sexually, at a greater cost. If you stress them, by say adding antibiotics, then the 'cost' of reproducing sexually outweighs the 'cost' of dying to the antibiotics, and they all suddenly start reproducing sexually and passinga round resistance genes.
I typed this a little rushed so I apologize for any spelling/nonsense errors.