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What is happening in this lava lamp experiment?

Still image for this video
The oil 'floats' on top of the coloured water because it is less dense, which means that the molecules are further apart and the bonds between them are weaker.
When the effervescent tablet is dropped in (attached to the coin so that it sinks), it reacts with the water and releases carbon dioxide gas. The bubble of gas is trapped in a droplet of water and rises through the oil, as it is even less dense.
The bubble then bursts at the surface and the droplet of water sinks back down through the oil as it is more dense.
The rising and falling of coloured droplets of water through the oil gives the effect of a lava lamp!