Your sentence is correct!
Original: Peat moss is like a sponge: it holds water and keeps the swamp moist.
Why it is correct (easy words):
- It has a clear subject and action: "Peat moss" and "is".
- The rest explains what peat moss does: it "holds water" and "keeps the swamp moist."
- The colon (:) is okay here because it introduces the explanation about how peat moss acts like a sponge.
Simple alternative sentences:
- Peat moss is like a sponge because it holds water and keeps the swamp moist.
- Peat moss is like a sponge. It holds water and keeps the swamp wet.
Great job! Your sentence is clear and grammatically correct.