Because the switches are not wired exactly as you described above: the bottom switch turns on when the water level drops, triggering and latching the relay... it turns off when the water level goes above it, doesn't matter to the relay, as it's already latched on the active state; then when the water level reaches the top switch, it turns on and trigers the relay, which goes to inactive state. As evaporation makes the water level drop, the top switch eventually goes back to off (no impact on the relay), and the bottom one eventually turns on again, repeating the cycle.
Anyway, long explanation, hope it makes sense, but the important thing is that the two switches are wired differently, the bottom one is inverted.
Nuno