Water provides a unique environment to accomplish physical feats. The buoyancy will support weak or injured muscles so that you can do more than you could on land. It will also take a load off your joints, which in turn, can reduce or eliminate the pain that occurs when your body moves against the resistance of gravity. Water exercise is highly recommended for people with arthritis, for this very reason.
Another property of water is called drag. Drag is water’s build in weight training resistance. Exercises performed against the resistance of the water develop muscle strength. The pool is an excellent place to develop ab and back muscle strength, as well as low back stabilization.
Working out in water can be pleasant, relaxing, and fun. That's why it can keep you motivated to move your body for longer periods of time, which in turn enables you to reap more benefits of exercise.
Researchers in Australia compared water exercise to land-based exercise with 60 people who had lower back pain. While the results showed no advantage of one type of exercise over the other, both helped participants significantly reduce pain and increase their functioning during activities of daily living.
Sources:
Sjogren T, Long N, Storay I, Smith J Group hydrotherapy versus group land-based treatment for chronic low back pain. Physiother Res Int. 1997;2(4):212-22.
Konlian, C., Aquatic therapy: making a wave in the treatment of low back injuries. Orthop Nurs. 1999 Jan-Feb 18.
Kisner, C., & Colby, L.A. (2002). Therapeutic Exercise: Foundations and Techniques.Philadelphia: F.A. Davis Company.

