Where does the water salute come from?
Water salutes are purely ceremonial and have no practical value. There are no confirmed reports on when it started in aviation, but it became common in the 1990's.

Before aviation, this practice started for ships on their inaugural voyages or returning from a long voyage. At New York harbor, jets of water were sprayed from fire boats. 

Commonly, water salutes are done for:


first flight of an airplane
first or last revenue flight of an airplane
last flight of a retiring pilot
carrying a fallen soldier


Mostly, it attracts attention and looks cool without costing a huge amount or having anything to clean up.