Sufficient production of Water is critical for Colonists. Each consumes a set amount every day and going thirsty for extended periods will result in Dehydration. This critical condition will quickly lead to death unless more wells are built. Different types of wells extract water from the ground for the colony. A regular Water Well must be placed on normal or fertile soil while a Bore Well can pump water deeper provided you have Energy to power it. Wells have different production percentages depending on the soil it's placed on. Water Storages can help alleviate a situation where lots of new survivors join the colony and the demand for water ramps up.
Some of the buildings will also reserve a set amount of water for their own use, so be sure to have enough capacity before constructing them to avoid a situation where you have to choose between an operational building and the well-being of your colonists.