**Core Concept**
The action of antidiuretic hormone (ADH), also known as vasopressin, is a crucial principle in the regulation of water balance in the body. ADH is secreted by the posterior pituitary gland and plays a key role in maintaining proper fluid balance by regulating water reabsorption in the kidneys.

**Why the Correct Answer is Right**
ADH acts on the V2 receptors in the collecting ducts of the kidneys, leading to an increase in water permeability. This results in the reabsorption of water back into the bloodstream, reducing urine output and maintaining proper fluid balance. The V2 receptors are coupled to G-proteins, which activate adenylate cyclase, increasing intracellular cAMP levels, and ultimately leading to the insertion of aquaporin-2 water channels into the apical membrane of the collecting duct cells.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because it does not provide a description of ADH action. Without specific details, it's impossible to assess its accuracy.
**Option B:** This option is incorrect because ADH does not act on the V1 receptors in the collecting ducts. V1 receptors are primarily located on blood vessels and are involved in vasoconstriction.
**Option C:** This option is incorrect because ADH does not increase sodium excretion. Instead, it increases water reabsorption, which can lead to an increase in sodium reabsorption as well.

**Clinical Pearl / High-Yield Fact**
ADH deficiency can lead to diabetes insipidus, a condition characterized by excessive thirst and polyuria. This condition can be caused by various factors, including genetic mutations, head trauma, or certain medications.

**Correct Answer:** D.