Most of the time when water is referred to as “incompressible”, it’s in the context of fluid dynamics. In that context, we’re talking about objects traveling through a medium (like air or water) at some speed. The typical medium in aerodynamics is the atmosphere, which is also considered “incompressible” at low speeds but must be treated as compressible at speeds that approach or exceed the speed of sound. Most engineering problems involving water vehicles are solved just fine by assuming water is incompressible, because the speed of the vehicle is very low compared to the speed of sound in water. It’s a useful approximation that makes the mathematics simpler to deal with, nothing more.
Like all approximations, the assumption will break down at some point, but last time I checked, we’re not designing many things that travel through the ocean at supersonic speeds…
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