Holy water basically lets you retrain, or reassign the points the hero gained while levelling up. Say you hire a Lvl 11 Hero, you can use a Holy water to get back the 10 points he assigned while levelling, and reassign them. But you dont know how the points were originally spent, so you may or may not gain anything. And it takes one holy water for every 10 levels of points you want to reassign, so say a Lvl 21 here would need 2 holy water.