When a doctor refers to water behind the eye when talking about macular degeneration, what does it mean?

Swelling: Most likely this is referring to swelling of the retina. Many times with wet macular degeneration one can have swelling or bleeding in the retina causing decreased vision.

Bleeding, fluid-both: "water" refers to leaking of fluid or blood from normal blood vessels, (that are supposed to be there) but are leaking due to injury, closure of the normal circulation or inflammation. "the normal pipes are leaky." this can occur in diabetes, uveitis, and retinal vein occlusions. Water can also be due to abnormal leakage from newly forming blood vessels as in age related macular degeneration.

Leakage or bleeding: The fluid referred to in in the back of the eye (retina), not behind the eye. It refers to leakage or bleeding arising from retinal blood vessels.

Hard to know: for sure. However, the doctor is likely referring to the fluid from the wet macular degeneration. The fluid is what oozes out of abnormal vessels that are part of wet macular degeneration, and what the name is based on. Modern therapies can dry up the fluid, and preserve vision. The fluid, and tissue that oozes it can have devastating effects on vision\, if untreated.