"Water injection" is an interesting performance upgrade, about which I am sometimes asked. As the name implies, this involves spraying water into the engine's inlet manifold, from where it enters the cylinder along with the air and fuel.

At least in theory, there is some benefit to doing this. The heat of evaporation of the water causes a cooling effect, lowering the temperature of the air in the cylinder. This increases the density of the air and so allows a greater mass of air to be taken in by the engine, which in turn allows more fuel to be burnt and so more power to be produced. More importantly, cooling the air reduces the likelihood of "knock" and so allows the ignition timing to be advanced closer to optimum. On heavily knock limited engines - for example turbos running very high boost pressure - this can give very large improvements in power. However, for a typical naturally aspirated (or mildly turbocharged) engine, the benefits are unlikely to be worthwhile.

In terms of fuel economy, there is no particular reason to expect a benefit from water injection. (Some motorists have apparently reported better economy on foggy days, but this is probably just because they are driving more slowly...)

One additional point: "professional" systems use a powerful electric pump to spray the water in at several Bar of pressure. Cheaper systems use manifold vacuum to "suck" the water in - which seems illogical, given that the time you most need the water (full throttle) is when there is little or no manifold vacuum to actually do the "sucking"...

A related technology is to spray water onto the intercooler and so reduce its temperature - this is simpler, but probably less effective.

For more information, you could do worse than visit the websites of Aquamist or rallycars.com.