Water is basically reverse slime: as you match dots that are touching the water, you’re cutting away the background to reveal more water. Usually the goal is to clear every piece of background in addition to something else — ice, anchors, beetles, whatever.
Ice and blocks keep water from spreading. Water, thankfully, blocks slime. But fire can spread into water, because to hell with physics, right?
When you have a water level, bombs, gem blasts, and cloud zaps can all clear the background and allow water to flow, so use them wisely.

Level 643: I’ve started clearing the background so the water can flow. The level started with one pool of water in each corner, but often you’ll get even less.

Level 643: Right after I cleared the white box in the previous screenshot, the water spread into the areas where the dots were cleared before the rest of the dots dropped.
Strategy:
The very first thing you need to do is see where the water originates on the level and figure out how quickly you can open up that water source. Determine if you’re going to need to use water to hold back slime, and then see if you need to handle anchors. Prioritize everything in your head and then have at it. Water’s not quite as difficult as slime, but again, if you need to restart because you know there’s no way to clear the level, there’s no shame in that.
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* What good are casual games if not for playing while pooping at work?