When people say that water can’t be compressed what that really means is that it can’t be compressed *much*.
With air if you raise the pressure from 1 bar to 2 bar then the volume will decrease by half. That’s pretty compressible. If you take a liter of water at 1 bar and subject it to 2 bar then you’ll have a hard time measuring that it has compressed to less than a liter–it’ll be by microscopic amounts.
For most purposes that means it’s good enough to just say water–and liquids in general–can’t compress. You can build a hydraulic system with hydraulic oil and reason about the volumes of hydraulic oil without ever caring about how that volume changes with pressure. But when it comes to something like sound that non-zero compressibility is what makes things work.
As a practical example, a friend of mine is a petroleum engineer who works with pipelines under the Gulf of Mexico. At one point one of the pipelines had some sort of a blockage (I forget the specifics) that required a bit of room. My friend suggested some maneuver that would compress the miles-long column of water enough to make the room, using thousands of psi, to which a college educated but junior petroleum engineer smugly countered “water is incompressible.” That cued whipping out the math on how incompressible water actually is and when you’re talking about thousands of psi and miles of pipeline the compressibility becomes enough that you can practically measure it on a human scale.
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