Water Arc is a waterbending ability that creates an arc of water from a nearby water source block. By pressing left mouse button (indicated by the little icon on the crosshair) you can throw it at a target to deal damage. Touching the Arc against mobs will not damage them. Only throwing the Arc will.
Water Arcs can also be used to block projectiles (i.e. arrows, shulker balls) and to put out fires by placing the arc near the fire. Mobs are not extinguished when hit with the Arc.