Water, with two hydrogens and one oxygen, is something that we call a polar solvent. The oxygen holds electrons much more tightly to itself than do the hydrogens, leaving each water molecule with electrically positive and negative zones.
The strong positive and negative electrical forces in liquid water allows a lot of solids to dissolve in water by splitting into positive and negative ions (eg. salt, it won’t dissolve in oil, but it will in water). In other words, water breaks down crystals and molecules into their components better than most other liquids.
These free ions (ie. fragmented bits of molecules suspended in the water) can then easily bump into other ions from other dissolved molecules and react to form new molecules in a way that would have been very hard if those ions were locked into their original solids.
Facilitating easier chemical reactions is very helpful to life and organic chemistry. All life uses water in this manner because it is the easiest way to facilitate use of chemical energy gradients to give life the energy to perpetuate itself and do more stuff.
It is theorised that highly polar liquids like water or ammonia might be essential for any form of life similar to ourselves.
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