Tell Me Why
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Have you been curious about something you observed and want to know why? Ask JM! So do write in to us at jantarmantar.why@gmail.com. Be sure to write your name, class and address so we can publish it along with your question.
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All life forms that we know (both plant and animal) need water to live.
What is so special about water?
Answer: Water is called the "universal solvent" because it can dissolve more substances than any other liquid. This is important to every living thing on earth. It means that wherever water goes, either through the air, the ground, or through our bodies, it takes along valuable chemicals, minerals, and nutrients.
Why is water such a good solvent? It is because of its chemical composition. Water molecules have two hydrogen and one oxygen atoms which are arranged not quite in a straight line (see figure). 
In a water molecule, the hydrogen atoms form a 104.5° angle with the oxygen atom. Oxygen has 6 valence electrons, one each of which binds with the hydrogens to make a bond with it. So there are four electrons left over, which are arranged in two pairs. The structure of the water molecules is like a tetrahedron (see figure) centered around the large oxygen atom. The hydrogen atoms are close to two corners of the tetrahedron. The other two corners are occupied by the two pairs of valence electrons that do not participate in the bonding. However, the oxygen atom holds these electrons very tightly so that even though each atom is electrically neutral, overall oxygen is a little bit negatively charged and the hydrogen atoms a little positively charged. Due to this charge separation, water is called a polar molecule. It is this property that makes it a good solvent.
Water dissolves many salts and organic molecules such as sugars and simple alcohols such as ethanol. Imagine drinking tea or milk with the sugar staying at the bottom! Water also dissolves many gases, such as oxygen and carbon dioxide—the latter giving the fizz of carbonated beverages. These are called hydrophilic (water-liking) molecules.
BOX: Kidneys and water
Our own kidneys and water's solvent properties make a great pair in keeping us alive and healthy. The kidneys are responsible for filtering out toxic substances that enter our bodies from the foods and drinks we consume. But, the kidneys have got to get rid of these substances after they accumulate them. That is where water helps out; being such a great solvent, water washing through the kidneys dissolves these substances and sends them on the way out of our bodies.
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Of course, the most important action is in living organisms: water dissolves not only the various types of sugars (carbohydrates) that we eat, but also proteins, DNA, etc. Without this, DNA will not be able to fold and unfold to give instructions to make amino acids and proteins, and life as we know it would not exist. Many organic substances (such as fats and oils and alkanes) are hydrophobic (water-avoiding) molecules. 
There are other properties of water that are important for life.

Boiling Point and Freezing Point
Water is a liquid for most temperatures that we experience on earth. This is in contrast to many other hydrides (containing hydrogen, like water). If water was very easy to freeze or boil, we would boil in summer and freeze in winter! Even in very cold climates when surface water freezes to ice, the water under the surface ice is still liquid and fish and other marine creatures can live in it. 

Surface Tension
Besides mercury, water has the highest surface tension for all liquids. Just like its boiling and freezing properties, this is also due to the strong hydrogen bonds in water molecules. The polarity of water also makes it very cohesive; that is, water molecules can hold themselves together in a drop. Surface tension and capillary action allows plants and trees to suck up water from the ground to the very tops of trees.

So water is one of the most important chemicals for life on earth!

Sources: USGS: https://www.usgs.gov, Wikipedia