Read PS-28, The Multifuel Operators Guide, in the TM section. Hydrostatic lock is caused by a quantity of liquid entering a cylinder or cylinders in sufficient quantities to exceed the available compression volume of the cylinder. More simply put, a cylinder has a quantity of liquid in it which exceeds the volume of the combustion chamber. As the piston comes up on the compression stroke, the intake and exhaust valves are closed so the liquid has no place to go. Liquids are, in practical terms, incompressible, so the engine comes to a "hard stop" before the piston reaches the top of the cylinder.
The liquid may be either coolant from a leaking head gasket or cracked cylinder head, or fuel from a leaking flame start heater. In any case, the effect is the same. There is more liquid in the cylinder than there is space available at the top of the compression stroke, and the engine locks up. Not a real common problem now as the head gaskets have been revised several times to improve sealing capability, and a flame start heater leaking that amount of fuel is a rarity. However, the hydrostatic lock check only takes a couple of seconds to perform, and in the one in a million or so chance you DO have a leak capable of causing hydrostatic lock, finding it BEFORE the engine fires on a few good cylinders and then locks up on a bad cylinder will save you a bunch of money.
The following two pages on hydrostatic lock are from PS-28, I'd suggest you download and print the entire manual (it is only 18 pages) before you drive your Deuce again. When I was in the Army it was mandatory reading before you got licensed to drive a mulitfuel!