Water is a standard Minecraft substance. All ComputerCraft blocks are waterproof - this makes turtles very convenient for underwater mining and exploration.
As with lava, water source blocks are deleted if turtles move through them, but often water flows will incorrectly persist nearby so long as any source remains connected - this can lead to large bodies of water floating in the air when turtles dig out pits using eg the excavate script. While this doesn't have any negative side effects in its own right (the server load while digging is light, mobs cannot spawn in the flooded area, and lava encountered lower down the shaft will mostly be converted to mine-able obsidian), sealing away the source blocks afterwards may induce some notable (although very short-lived) server lag while the oversized flows subside.
Turtles may collect water source blocks by calling turtle.place() with an empty bucket in their selected inventory slot. They can likewise place source blocks by doing the same with a filled bucket selected.