So let’s say that you are an engineer setting up the water system for a town. You have to supply enough water pressure for the faucets and showers etc. Now, the water demand is not constant all day. There is more demand when everyone is waking up and showering and also when everyone comes home from work/school and showers/makes dinner etc. In the middle of the day, there is not as much demand for water. The simplest approach is to figure out what the largest demand is, factor in a factor of safety, and simply purchase enough/large enough pumps to meet that demand. If you go with the this solution, you will have large pumps turning on and off as the demand fluctuates. Large capacity pumps are expensive. What if you could use smaller, cheaper pumps to do the same work? Well if you use smaller pumps running constantly, you can do the same work as larger pumps running intermittently. All you would need is something to store the energy. That is where the water tower comes in. You pump water up the tower so that it will flow down when someone opens their faucet. If you have ever wondered why water towers look like a ball on top of a stick, its so that more water can be stored at higher heights so that more energy is stored with the same amount of water.
Bonus: water towers are often constructed at the highest elevation in town so that the water can flow downhill to other parts of town and provide additional water pressure.
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