In simple terms water injection is another way to prevent detonation, as the water is injected into the manifold, it evaporates reducing the temperature of the air entering the engine.
Be careful about the amount of water you pump into the motor, too much can lead to severe problems.
But it is a cheap and effective solution, but it does mean you need to continually fill the water.
Have a look at
http://www.autospeed.com/cms/A_0115/article.html