What difference does it make if I substitute low-fat milk for water in bread recipes?
Off the top of my head, the added sugar from the milk may cause the yeast to over-leaven the bread.  The opposite is true when substituting water for milk, you may need to add sugar.

Edit: According to this site, Glutathione in the milk must be destroyed by heating it first, otherwise it tends to inhibit yeast.  Also, allegedly lactose doesn't contribute as much to the yeast activity as I thought, as it doesn't break down as fast as raw sugars.

Other sources seem to corroborate the fact that the bread is softer with milk.

Some others may be able to add more insight ...