When vasopressin binds to V2 receptors, it triggers a signaling cascade that results in the insertion of aquaporin-2 water channels into the apical membrane of collecting duct cells. This process increases water permeability, allowing the kidneys to reabsorb more water from the urine, thus concentrating the urine and conserving water in the body. The activation of these receptors is essential for maintaining homeostasis, especially during dehydration or low blood volume conditions.