Fresnel Dragging Explained
Here is how Fresnel Dragging works on the microscopic level. This model is based on the Fizeau experiment. The light travels at c through the vacuum between water molecules, but is carried with a the water molecules at their speed v for a short time each time it encounters a water molecule. See the following paper for the theory, maths and explanation for how Fresnel Dragging works.
Note: There are two Red photon shown down each path - so you can track the progress of the photon through the water more easily.
And for an experimental setup that is moving from left to right at 40% of the speed of light, the whole frame is length contracted and the light moves between water molecules from left to right through the frame at speed (c - v) and from right to left at speed (c+v).