A water obelisk is used to create water orbs by casting Charge Water Orb with an unpowered orb in your inventory. It is located on a small island south of Catherby that is only reachable through a ladder in Taverly Dungeon.
The ladder to reach the obelisk is found in an area with black dragons in it, past the hellhounds and black demons. A player with 70 or 81 agility will reach this faster than running around the whole area, and doesn't require a dusty key to be used. Recommended you take an Anti-dragon shield with you in case a black dragon manages to breathe fire on you.
If you do any water orb runs, a fast way to do runs is to leave through the one-way grappling shortcut and bank in Catherby and teleport back to Falador and reobtain your orbs there.