I already wrote about some of the history behind Japanese water stones, but how to use them is perhaps a more common question. The answer is a bit tricky. It depends...
The first thing it depends on is the type of stone. Natural stones should be soaked in water for quite a while - at least to the point where the surface does not dry quickly when removed from the water. Some people store their stones in water. I don't think that would be a big problem unless you live somewhere where the temperature gets to a point where the water in the pores of the stone would freeze and cause it to spall or crack.
Ceramic stones can either require soaking or not. Read the box they come in. Shapton stones for example just need a bit of water on the surface.
Once the stone is wet, you use it just about like any other sharpening stone. The usual advice is to keep one hand low on the blade to apply pressure and use the other to guide. Use long strokes. Stand in a well-balanced stance so you can move freely. But since waterstones are softer than many oilstones you also need to take care of how you use the stone. Try to use the entire surface so that you don't make a hollow in the center. Sometimes if there is something I'm working on which would definitely create a scratch down the middle I use the side of the stone instead. Of course you can always flatten the stone (they sell a variety of plates and the like for this) but it is better if you can just use the surface evenly if you can.
From this point it is as simple as sliding the metal across the stone. Work up from coarse grits to finer. When in doubt about whether to use a coarser grit to start, just use it. The finer the grit, the longer it takes to remove the same amount of metal, and if you have nicks to remove it can take a long time if the stone you are working on is too fine.
Keep enough water so that the water is still visible on the surface. If you haven't soaked the stone long enough you will get a sticky muddy surface instead of the fine slurry that you should have. For really fine stones, use a nagura stone to create the slurry before you start.
A couple other tips. You can take some of the slurry on a paper towel or rag and use it to polish the areas you are not sharpening. Clean up the black stuff as soon as you are finished. It has a lot of iron in it and will stain things. I'd consider rubbing your fingernails over a bar of soap before hand, or using some lotion, but since I never remember t try anything like that before I start, I can't really say how it would work out.