Where does your water come from:
According to the US Geological Servey (USGS), the earth contains 326,000,000 cubic miles of water, and over 70% of the earth's surface is covered by water.  Although water is abundant on the earth, most of it is unusable for drinking, agriculture, or industry.   
As the diagram below shows, only about 0.25% of the water on earth is available for drinking, agriculture, or industry.  Nearly 99.75% of the water on earth is either salty (mostly in the oceans) or locked up as ice (mostly in the polar ice caps).  
Fresh, water accounts for only about 2% of the world's total water supply, the rest is salt water.  
The majority of the fresh water (87%) is locked away as ice in the polar ice caps, continental ice sheets and glaciers.
There are only two sources of fresh water for all individuals in the world, whether they live in the most remote area of the earth or in the middle of New York or Beijing: Surface water and Ground Water.  
Surface water, such as rivers and lakes, only accounts for less than 1% of the worlds fresh water reserves.  Water in the air, in plants and animals etc., accounts for such as tiny percentage that it has been included in the surface water category.  
The rest of the world's fresh water supply, about 12% is groundwater.

Note: on recent checking (5/05) it seems as though the values described here will need to be updated based on slightly different values at sites like:
http://www.factmonster.com/ipka/A0004674.html

The Water Cycle:
Fortunately, Earth's water supply is not static - we don't just use up the fresh water and then run out.  The fresh water supply is constantly purified and replenished (although human activity can negatively impact this process).  The overall water distribution on earth is in balance:
Evaporating from lakes, streams, rivers, oceans, land surfaces, plants, animals, and ice fields 
Circulating in the atmosphere as water vapor
Condensing and falling back to the surface as precipitation, rain, snow, hail, etc.
Flowing through the soil to recharge groundwater aquifers
Flowing out of groundwater aquifers into rivers and lakes
Flowing along the surface back to the oceans

This is the so-called water cycle that nearly everyone has studied in school at one time or another.  
When water evaporates it leaves most of the contaminants behind.  
The relatively pure water vapor can then pick up vaporous or particulate pollutants from the atmosphere as it precipitates.  
After falling on the Earth's surface, the water can dissolve more pollutants from the soil or rocks it contacts.  
Pollutants can also be directly added to water during contaminant spills or discharge from factories, agricultural operations, etc.
Soil and rock can do a good job of filtering some pollutants out of the water as it percolates through them and into the aquifers.  That is one reason ground water tends to be less contaminated than surface water.

Surface water:
Even though fresh surface water (in rivers, streams, lakes, and reservoirs) makes up just 1 percent of the fresh water in the world, about 75 percent of all the water we use in everyday life come from surface water sources.  The other 25  percent comes from ground water. It is only natural that we heavily use our surface water resources.  It is a lot easier and cheaper to get water out of a river, lake, or reservoir than it is to drill a well and pump water out of the ground.  Also, rivers are more accessible to us -- we generally build our towns and cities next to a river or lake.  Unfortunately, however, the accessibility of surface water makes them very easy to pollute.  Until fairly recently the obvious solution to removing noxious wastes from a person's immediate environment was to dump it into the nearest river and watch it drift out of the "neighborhood".

Ground water:
Ground water is the largest available reservoir of fresh water. comprising about 12 percent of the available fresh water. Despite the abundance of ground water relative to surface water, only about 25 percent of the fresh water used in everyday life comes from ground water aquifers. This is largely due to to the difficulty and expense of using this water source relative to surface water.

Groundwater is defined as the water filling spaces between rock particles in special porous rock layers known as 'aquifers'. Perhaps the best way of imaging an aquifer is as a solid sponge. Rainwater trickling down from the ground surface (infiltration) fills the spaces in the rock.  When the water is stopped by an impermeable layer of rock underneath the aquifer (a confining layer) the aquifer begins to fill.

Water in an aquifer does not sit still.  It flows through the spaces and cracks in the rock, pulled by gravity and pushed by the force of the water above and behind it. The water moves from an area where water enters the aquifer (a recharge zone) to an area where water exits the aquifer (a discharge zone).  This movement has the effect of removing a lot of impurities from the water, filtering it through the rock so that groundwater is generally much cleaner than surface water.  As groundwater can be very clean, it may require little or no treatment before being used.  The level of treatment depends on what it is to be used for. This often makes groundwater a relatively inexpensive source of 'raw water' for public supply.

The Environmental Protection Agency EPA has a Ground Water Primer site you may wish to take a look at.  This program is written for community leaders, public water system suppliers and the general public that has an interest in protecting both their water supply and ground water in general.

An excellent site that covers many aspects of Earth's water is hosted by the USGS.  The U.S. Geological Survey's (USGS) Water Science for Schools web site offers information on many aspects of water, along with pictures, data, maps, and an interactive center where you can give opinions and test your water knowledge.  Although it is targeted at school-age children, the information is very complete and presented in a way that can be enjoyed by anyone.