I've played Lords of Magic on and off for two decades. Thought I'd share my knowledge with you all!
I first installed Lords Of Magic over two decades ago and through the years have accumulated probably 1000 hours of playtime. I've always played Special Edition, unmodded, except for this unofficial patch which only changes the gameplay by removing the Pegasus spawning in level 1 Chaos encounters. So, to cap off my long familiarity with this game, I've decided I'll provide redditers with my overly detailed analysis of each Faith's units, spells, artifacts, strategies, and miscellaneous tips, tricks, and trivia.

WATER is a fun Faith to analyze because of how unique it is among the 8. As a young boy I found the idea of playing as tropical Amazons unappealing but as I learned more about Lords of Magic I discovered how powerful WATER can be.

Pro & Con summary

+ Above average mobility, in particular Ships can move farther than any other unit in the game

+ The only Faith with several direct healing spells besides LIFE, and Potions provide healing without the need of a Mage

+ Best Scout in the game and, besides Cavalry, units tend to have above average Stealth

+ Above average attack rate and hit recovery on most units

+ Diverse variety of effective Spells make WATER one of the most practical magic schools to utilize throughout a campaign.

- Weakest Mage Tower Creatures

- Weak options for dealing direct magic damage

WATER Barracks Units

Amazon Warrior: lower experience needed to level than other Warriors, this may provide an advantage early game but I've never noticed much practical difference. Very good attack rate and the best hit recovery means the Amazon Warrior is the hardest Warrior to hit-stun lock and can deal with mobs of tightly packed enemies much more effectively than its rival FIRE. Amazon Warriors are also significantly less expensive to recruit than any other Faith, except for LIFE. Amazon Warriors only downside is that their Attack, Defense, and HitPoint totals are all mediocre, which may have them struggling in one on one fights against other Warriors, and gives them less ability to 'Defend' against units with very high Attack. This can be alleviated with WATER Warrior artifacts, which are very effective at increasing combat potential.

Lizardmen: WATER's infantry, Lizardmen, are actually better than Heavy Cavalry in almost every way except for having much lower Defense. Once Lizardmen reach max level 5, which requires the same number of Experience points as it takes Heavy Cavalry to reach 4, Cavalry can start gaining an advantage in Attack as well. I typically favor Lizardmen over Heavy Cavalry until I can get a Barracks advanced enough to start producing Cavalry starting at level 3.

Heavy Cavalry: Identical to ORDER Knights except for terrain penalties. Knights have the best potential Defense of any troop unit and, since WATER has more difficulty fielding high Defense units than ORDER, Heavy Cavalry may be even more essential to their Faith. At level 5 Heavy Cavalry can 'Defend' almost as well as an Amazon Warrior without artifacts and they are a natural choice to form the vanguard of an advanced WATER party.

Corsair: The best overall ship in Urak and by far the best ship for fulfilling a navy's main purpose, transporting land units. Not only does it have more movement points than any other unit, period, Corsair's seem to use their movement more efficiently getting nearly twice as far as other ships per point. The Corsair is an expensive unit, with total resource costs greater than any tier 2 Mage Tower Creature, but lower than the tier 3 Great Temple Creatures. However is is very unlikely you'll ever lose one in battle. The Corsair's superior sight range and vastly superior movement allows WATER to choose when to engage in naval combat, and to easily retreat from it. Furthermore non-player Faiths will rarely produce ships and even more rarely use them aggressively. Marauders on the water are uncommon and typically consist of a single kraken or serpent, which seem to have much worse combat stats than the ones WATER can create. The Corsair doesn't actually have the best combat stats among the ships, ORDER and EARTH ships can beat a Corsair handily in a fair fight and DEATH will be a very close battle. If, for some bizarre reason, you have both opportunity and inclination to attack a powerful enemy navy as WATER (a situation I can't imagine occurring outside of mods or multiplayer) you may actually have a reason to produce Kraken and Serpents.

WATER Thieves' Guild Units

Amazon Thief: A glass cannon with peerless ranged damage per second potential thanks to their best in class Ranged Attack growth and 2nd best Attack Rate. While the Amazon Thief's potential damage output is impressive this advantage is offset by several subtle disadvantages. The Amazon Thief is THE most expensive thief to recruit of any Faith. The only thief that is close to as pricey as the Amazon is DEATH's Assassin, yet the Amazon is significantly easier to lose as she has worse Stealth and much worse Defense. Defense is the Amazon's biggest weakness, it is the very lowest of all thieves, which the Amazon's slight advantage in total HitPoints does little to offset. The Amazon also requires more Experience Points to level up compared to other thieves, EARTH's Burglar can reach level 10 with the points that would leave an Amazon at level 7. This means the Amazon is both very expensive to train and very fragile, a difficult combination to manage.

Slingers: WATER's archers are the definition of average. Range, Ranged Attack, Hit Points, Movement, Attack Rate, and Cost are all solidly middle of the pack. Slingers are relatively durable for a ranged troop, their Defense is the only stat which is markedly better than most other archers, in fact is even a bit better than WATER's infantry. Their Attack is also the best of any proper ranged troops, the only archers which are better in this area are EARTH, CHAOS, and FIRE which are much below Slingers in ranged combat potential. With WATER's support spells this allows Slingers to hold their own in most combat situations, and the only thing an army of Slingers will likely struggle with is multi-target damage or disable magic and units with both high Defense and Missile Resist.

Seagull: By far the best Scout at scouting, with the highest Movement Points, Combat Speed (for retreating), Sight, and it also Flies! Seagulls cost about twice as much as non-flying Scouts, and probably won't beat any other Scout in a fight but these are small disadvantages for having such a significant advantage in the categories that are essential to revealing and monitoring the Fog of War

WATER Mage Tower Units
Priestess: The stats on WATER's Mage are completely average for a Mage, which is to say she'll die quickly to just about any attacks under normal conditions and she's not going to be dealing much damage through melee attacks. Blood Lust, Heal Self, and Guardian Waves, and WATER's Healing Potions and artifacts can make a Priestess relatively resilient under duress, and Steam Cloud can punish her attackers, but I still don't recommend using even a high level Priestess in a deliberately risky, aggressive manner except as a last resort. WATER's spell effects, which are mostly buffs and heals, are suited for a strictly supporting role. As the polar opposite of WATER's rival FIRE's Sorceress you'll never want to field a Priestess solo, she NEEDS an army with her to show her potential. The downside of this is that WATER party's with a Priestess will lose some of WATER's mobility advantage, as the Priestess' Movement is in the lowest tier of Mages and worse than any other WATER unit.

Kraken: The Kraken can only move on water terrain tiles and has worse Ranged Attack than a high-level Slinger. As a Tier 1 Mage Tower unit available at the very start of a campaign it is nearly useless since the only targets it could reasonably combat, enemy Ships and Flying units, are practically unheard of in the early stages where Tier 1 Creatures are relevant. Even in the best of circumstances the Kraken isn't particularly effective. Kraken needs to get into melee combat to be effective since its Attack far exceeds its dismal Ranged Attack, but the Kraken's mediocre Defense and Resists and the high Range and Ranged Attack most Ships have mean it will take a beating while moving to engage. The Kraken does have better Attack than most Ships, and superior Attack Rate to any of them, but every Ship besides FIRE's still has enough Attack to readily beat Kraken's Defense: so even if you can get Kraken into melee with the enemy navy victory is far from guaranteed unless you outnumber them. The Kraken is nothing more than a cheaper but less effective way to attack enemies at sea than Corsairs. Although Kraken have the ability to move along the waterways in groups of up to 9 compared to Ships' 3 the situations in which a swarm of naval Creatures would be useful are practically unheard of in unmodded Lords of Magic. Krakens' Movement Points and Sight are only half that of Corsairs' so not only are they heavily restricted by terrain, they aren't even particularly mobile on the one terrain type they can move on!

The Water Elemental is WATER's easiest way to get a unit with 15 Attack, cast Quicksilver on a swarm of them and Rust on the target and you'll have a relatively cheap and easy way to beat down high Defense enemies.

Serpent: WATER's Tier 3 Great Temple Creature is an expensive novelty. Like an overblown Kraken the Serpent further emphasizes the Kraken's advantages in melee combat while maintaining dismal ranged ability. However the Serpent is far harder to kill then the KrakeN