Children need to build control of their large as well as small muscles, and what better way to do this than while having fun. Often it's the little movements which help to enhance large-muscle development, providing short handled instruments are good for this- such as mops, paint brushes and pipettes.
Water play encourages the development of eye/hand coordination through pouring, squeezing, stirring, painting, scrubbing, squirting and in this case writing. When children are playing with water they tend to lose themselves in the activity and spend long periods of time exploring and playing with it. This encourages children to focus and any activity that holds a child’s attention for a length of time will contribute to increasing their concentration span over time.