The volume does change if the initial values of the volume of sugar and water are looked at separately [(volume of sugar or volume of water becomes volume of sugar + volume of water when combined) as opposed to (volume of sugar + volume of water while separate becomes volume of sugar + volume of water when combined)]. If 2 grams sugar is poured into 2L water, the water will rise (a small bit, but…
There are approximately 3 3/4 cups of powdered sugar to 1lb WEIGHT in dry measure of powdered sugar....+/-, depending on density of the sugar. Powdered sugar is packaged by weight, not volume. Any recipe is calling for a volume, so the volume it takes to equal a given weight of the dry substance being measured is dependent on the density of the substance.
These are measurements of weight, not size. A kilogram weighs about 2.2 pounds. So a kilogram of sugar is bigger (would take up more space, has more volume) than a pound of sugar. In fact it would be more than twice as big, 2.2 times bigger in fact. But a 1 kilogram bag of sugar would be virtually the same size as a 2.2 lb bag of sugar.
This is not a valid comparison cups measures volume while pounds measures mass. Think of it like having 3 pounds languid and 3 pounds of air. Both are the same 3 pounds but 3 pounds of gold is small enough to fit in your hand while air is so light you wouldn't be able to carry the container it is in because it would be so big.