The continuity equation describes conservation of mass for a fixed control volume. In fluid mechanics, a system is a collection of the same contents over time, and its mass stays constant. That idea is the starting point for deriving the equation.
To analyze flow, a fixed, non-deforming control volume is chosen so it matches the system at one instant. The Reynolds transport theorem then links the system to the control volume. It shows that the rate of change of system mass has two parts: mass...