On turbocharged cars water injection can also be used to cool the intake charge and reduce the possibility of detonation, though some engine tuners to frown upon it. Nonetheless, water has a very high specific heat capacity, which means it can absorb a lot of heat energy without a significant increase in temperature. As a result, water injection systems have been around in one form or the other since 1936 and were used on a variety of aircraft engines during World War II. However, water injection is only required if you're running high boost of more than 12 psi, and should be used in conjunction with a good intercooler.
The water injection system basically consists of a storage tank, a water injector, which is similar to a fuel injector, a high pressure pump, a pressure sensor connected to the intake manifold, and an intake air temperature sensor. Calling it water injection is possibly inaccurate as it can wither be pure water, preferably distilled water, or a mixture of water and methanol. Either way, atomized liquid is usually injected into the intake system when the intake air temperature is exceeding a certain value and the engine is on boost and is usually injected downstream of the intercooler.