Alkaline water electrolysis represents one of the simplest methods employed for renewable hydrogen production, reaching high conversion efficiency utilizing cheap and abundant transition metals such as nickel and its alloys. The outstanding properties of Ni-materials do not arise from the metallic host, rather from the surface passivated with various oxidized compounds formed during the electrochemical process. This newly formed layer is responsible for the catalytic properties of the system, therefore the investigation of its evolution as function of potential and time is crucial for a deeper understanding of the overall electrochemical process. However, the characterization of the chemical environment at the topmost layer, as well as the underlying layers, is complex and requires surface sensitive techniques. Here, we show that while ambient pressure soft X-ray photoelectron spectroscopy (APXPS) allows to follow the changes of the topmost layer, characterization of the deeper layers modifications occurring during electrocatalysis requires a combination of soft- and hard X-ray photoelectron spectroscopy (XPS/HAXPES), coupled with electrochemical impedance spectroscopy (EIS). The findings show how the high electrocatalytic activity of Ni (oxy)-hydroxides is directly related to the increasing water intercalation into the passivation layer, which supports the long-debated hypothesis of a water mediated OH⁻ diffusion mechanism. High performance of the electrode is promoted by the peculiar structure of the surface, which self-organizes during the initial formation of the passivation layer enabling self-healing during electro-catalysis. Ultimately, we show how the investigation at different depths by means of XPS/HAXPES in combination with EIS allows a better understanding of the chemical changes occurring throughout the passivation layer, signaling a paradigm shift from the traditional explanation of electro-catalysis by a simple electrode material with a stable nanostructure, to a concept leaning towards a dynamic electrochemical interface.