Bismillah al-Rahman al-Rahim
“And His Throne/dominion extends on the water - that He might manifest to you, which of you is best in action....” (Qur'an 11:7) 
Water here perhaps refers to the primordial substance from which all things emerge - the liquidity/fluidity suggests that it is full of potential but not yet manifested into specific creations. It is the perennial, foundational substance out of which the physical universe is created. It is described as water - fluid, liquid, able to be poured into any form, as yet formless, but able to flow into any form. The life giving properties of the water of this lower universe, the water we drink, is a symbol of this primordial water.
The “water” over which the Throne extends perhaps represents “undifferentiated reality” - ‘every potential is within it but as yet it has not given birth to any specific forms.’ As a “liquid” it is unified, one substance, and not yet articulated into separate creations. But it contains the ability to give birth to myriad creations.
God's Arsh, His Throne - that is to say the realm from which His commands issue forth, is above the water. In other words it is a realm that has dominion and control over this water. A throne is a symbolic place from which a King's commands issue forth to the kingdom over which he rules. The commands, the Divine Will issues forth from the Throne and the potential that is in the water begins to be realized. Creation in all its forms manifests itself - the perennial foundational substance articulates into infinite varieties of creations.
Elsewhere the Qur'an refers to the emergence of all life from water. This can perhaps also be tied to this primordial substance whose water is like a fountain of life issuing forth form after form, creations of every variety emerging into existence. The Qur'an is not concerned with detailing the mechanism by which this happens - it is not a science book. It is concerned with telling us the higher reality behind the creation that we witness. Our science will explain a portion of the process - those mechanisms that are visible/observable to us in this material world. The Qur'an is concerned with making us aware of the deeper, concealed realities that underlie the mechanisms we witness at work in this world. Science can show us a limited “how” as it is restricted to the observable methods and mechanisms of this universe and it can show us how to put this knowledge to instrumental use - it illuminates, at its own level, the subtle mechanisms of this world. The Qur'an points out to us the invisible realities which are the underlying substrata that drive the mechanisms of this world.
The water, is perhaps then the ground of all being, all existence. Mulla Sadra speaks similarly of a “sort of invisible background that we do not ordinarily see because it is everywhere - because we see with it - and ultimately because we are it....” (pg 63, Wisdom of the Throne) because we are articulated forms arising within it.
Human existence has a presence that extends beyond this world - because the nature with which humans are created reaches from this earth to the Throne. “We created man in the highest stature....” It is said that the innermost heart or reality of man is connected to the Throne of God. Those few human beings who have perfected their nature, who have purified their nafs - their hearts are consciously awake to this reality and God bestows ability upon them through this conduit. He bestows upon them a presence and a power and issues through them His commands - they can (to the extent allowed) shape, influence, and direct the mechanisms of this lower world whose substrata is the water upon which the Throne rests - they have a seemingly miraculous influence in this world.
That water, that deep and subtle substance from which we are created is within us even now and it is amenable to being shaped by God's command. It is a deep well which we can draw upon to give life, vitality, correct form, and real presence to our inner configuration and to the actions which arise from this configuration. It is as if God has allowed us a hand in our own creation, in our shaping our own selves - He has (through our turning to Him) given a portion of the command to us. So no human is closed to transformation, to reaching elevated stages except through their own turning away - through drying up, desiccating, and making a desert of their own inner substance and nature, a parched stone of their heart. “But indeed, there are stones out of which rivers gush forth, and indeed, there are those which split asunder so that water flows from them...."” (Qur'an 2:74) That access to the subtle “water” is always available. The human journey will display for us our inner configuration, our actions, and our ability to open ourselves to the beauty of the Divine realities within which we journey “...that He might make clear...which of you manifests the most beautiful conduct.” (Qur'an 11:7)