A water tower stores water for a town's use.
One way water is supplied to town residents is for the water department pump water from a reservoir, river, or well into a water tower, which often sits on high points in the town. Then, using gravity, the water flows through pipes all the way to the last house in a far away subdivision.
This image shows the Peachoid, a water tower in Gaffney, South Carolina, that was built and painted to look like a peach.
Creative Commons, Wikimedia