A water birth is exactly what it sounds like, giving birth to baby underwater. Warm water decreases hormone levels, blood pressure, the amount of pain, and adrenalin, the "fight or flight" hormone responsible for making stress level skyrocket and blood pressure rise, all while increasing endorphin production, which inhibits pain. Since perception of pain is influenced by anxiety level, the amount of pain experience while bathing also ebbs.
A lot of the discomfort associated with labor is caused not by baby's movement within a woman, but by the pressure gravity puts on skeleton, abdomen, and breasts. Water eliminates the power that gravity has over womans body and allows many positions to be much more comfortable. Water can also work on womans body parts to make them more cooperative. It encourages the cervix to dilate and makes the perineum more elastic, which means that it's less likely to tear. If it does tear, it's less likely that the tear will require a great number of stitches or an episiotomy. The warm water (between 90 and 101 degrees) can also make woman contractions more efficient by increasing the blood supply to the uterus.
The humidity and moistness of the air coming off the water can ease woman breathing. With breathing eased, the pressures on body lessened, the stress level lowered, and the pain decreased, a woman can expend all her energy laboring. Water births have been associated with faster delivery and less blood loss, though evidence supporting these claims, like most claims about water birth, is more anecdotal than scientific at this point.
Many people believe that water delivery is easier on babies as well. Water equalizes the pressure on baby, allowing optimal blood and oxygen flow during birth, and it has been credited with correcting minor malpresentations, like a misaligned head. Water is also said to be a gentle introduction for the baby to the world outside woman womb. Most midwives and doulas can help prepare for a water birth at home or at a birthing center, and most newer hospital units have birth tubs available. Waterproof fetal monitors are even available so that you can enjoy the benefits of both our technological age and this age-old method of pain relief.