TCMU2009: People use water to cool their computers? That seems really archaic. I'm going to read up on how to proper cool mine. It sounds extremely important. Now what is overclocking? Is that like flipping a switch and pushing your card past its limits?
Water can move more heat than air. Same reason water cooling is used in cars. But good water cooling is expensive, and cheap water cooling is no good. You have to be well experienced in building and maintaining computers, and willing to put a lot of effort into making it work right.
Cramped computers overheat. Unless you are a mechanical engineer by trade, you will be best served with a large, well ventilated case and plenty of fans.
Overclocking is more like twisting a dial than flipping a switch, but yes, the objective is to push your CPU or your GPU past its designed limit. Manufacturers are pretty conservative, because they don't like dealing with "hey, this wouldn't run at its rated clock speed" returns. So the designed limits are often well below the average capability of these devices.
Overclocking is generally easier than, say, water cooling, but it is still something that only an experienced computer builder and maintainer should be doing.