Water bottles will automatically satiate thirst, as the player lives in Project Zomboid.
A bottle of water will gradually lose its content, and it will have to be refilled. To refill an empty bottle, you need to have it in your main inventory, then you right click on any water source (Sinks, wells, Rain Collectors) and click "Fill empty bottle".
As of Build 31, water from rivers or Rain Collector barrels will be tainted, causing the player to be Sick. After a random amount of days at the start of a new game, the water works will be gone, and the character will have to survive on scavenged water or what is left in cisterns and house systems. Water Bottles are found in trash cans and refrigerators.
See the Water page for comparisons for water storage.