Typically, you would render skin for cracklings in lard. But the confusion of adding water may be from the process of rendering lard from pork fat.
I save my fat trimmings from pork butts, (only the clean white fat, no hard stuff) and freeze them. (I'm told leaf lard is best, but don't have a good source)
When we have enough, I cut into 1-1/2" (ish) cubes, and place in a large dutch oven with a cup or so of water, and place on medium-low heat. After a while, the water will evaporate (putting water in helps prevent the fat from going over 212 F , if it does, the fat will brown more than you want) and the fat will melt, and you'll notice little brown bits (cracklings) floating to the surface. You need to stir occaisionally during this whole process (about 45 min to an hour and a half, depending on how much fat. I usually add a little water (about a 1/2 C at a time) to keep the fat from getting too hot, until it's all evenly melted
When the brown, crackly bits sink, take it off the heat. It will look golden brown, but will cool to a milky white.
Cool, and strain through cheesecloth, or, my favorite, through an unused (except for food purposes) handkerchief (does a better job than cheesecloth, and all you need do is wash and reuse!) reserving the cracklin's (salted and put on paper towells to drain ASAP) for other uses. The lard will keep in mason jars for quite a while refrigerated or frozen.
For frying actual skin, take a jar or two of the homemade lard, melt it in a large pot and bring to about 350-375 (outside, trust me) and drop the DRIED (hugely important unless you like being burnt) skin in (preferably in a basket of some kind to make retreival easier) and cook till golden and floating on the surface. Remove, drain, drain more on paper towell, salt liberally, and enjoy!
Tip: These ROCK when added to your favorite chex mix recipe