Why did towns need to be located near water to succeed

A human body is ~60% water. This means that without water, people cannot survive. 

Also, water means food, because it means that it is easier to plant food, kill animals that go to the area for water, etc.

Later on, water was needed to power certain buildings, including flour mills, etc.

All these made water extremely important, and without it, a town would die off

hope this helps