Water has many useful properties, and so it is ubiquitous in life on earth. The useful properties of water arise from its structure.
A Water molecule consists of two Hydrogen atoms covalently bonded to an Oxygen atom. Because oxygen is more electronegative than hydrogen, it has a greater pull on the shared electrons. This that the oxygen atom is slightly negative (δ-) (because of the closer electrons), and hydrogen is slightly positive (δ+). Water is therefore called a Polar Molecule.
The slightly negative and slightly positive regions of the water molecule are attracted to charged regions of other molecules, forming Hydrogen Bonds (which are weak in comparison with other chemical bonds). Water will form Hydrogen Bonds within itself.
Hydrogen bonds within water give it a high stability, which means that a large amount of energy is required to raise the temperature of water. This property means that oceans and lakes provide a stable environment in which organisms can live. This also means that a large amount of heat is required to evaporate water, so it is very useful in cooling, for example, some animals sweat to cool down.
As water decreases in temperature, its molecules are less able to break the Hydrogen bonds, as they have less kinetic energy. This means that a semi-crystalline structure is formed, which holds the water molecules apart, making ice less dense than liquid water, such that it floats. This means that it insulates the water beneath, allowing organisms in the liquid water to survive.
Cohesion is the tendency of molecules within a substance to 'stick together'. Water has a high Cohesion because of Hydrogen bonding. This is important as transport of water in the Xylem in plants relies on water being pulled up. Cohesion also gives the water a high surface tension, allowing small organisms, such as Pond Skaters, to walk along it.
Water is good solvent for other polar molecules since it can interact with the charged regions and dissolve the substance. It is also a good solvent for ionic substances, since the water molecules cluster around the ions and separate them, thus dissolving the substance. This property, along with the fact that water is liquid over a wide range of temperatures, makes it ideal for acting as a medium in which metabolic reactions can occur, and also as a transport vehicle.
Water also takes part in some metabolic reactions, for example, in Hydrolysis and Condensation reactions.