Atomistic molecular dynamics (MD) simulations of alpha-, beta-, and gamma-cyclodextrins (ACD, BCD, and GCD) in aqueous solutions have been performed. Detailed analyses were carried out to compare the microscopic properties of water confined within the cavities of these macromolecules and in the hydration layers around them. It is noticed that reduced tetrahedral ordering of water in and around the CD molecules are associated with their restricted motions. Interestingly, unlike the translational motions, the rotational motions of cavity water molecules are found to be highly dependent on cavity dimensions. Additionally, it is found that severely hindered rotational motion of cavity water molecules is the origin of drastically restricted structural relaxation of hydrogen bonds involving those water molecules. It is demonstrated that the geometrical constraints within the cavities of the CD molecules enhance the rate of reformation of broken hydrogen bonds, thereby resulting in rapid establishment of the breaking and reformation equilibria for hydrogen bonds involving cavity water molecules.