This is obviously one of those things "we're never supposed to think really hard about", but, if we
have to find some sort of justification, the water needed to sustain a small town would likely run the Pokémon dry.. You'd need a big amount and necessary infrastructure to keep it as a reliable source, and that would probably be at the very least unethical if it hurts the Pokémon - yes, even in a world where battling is a thing because, again, it would likely require either a massive amount of mons and/or essentially slave labor from the mons to keep it sustainable.
The "creating matter from nothing" is technically true for a lot of attacks, not just Water ones, and Pokémon and humans are somewhat often mentioned interacting.. Basically, I think, sure, you can use your Marill's Water Gun to help you water your garden and such, but from there to being a reliable source of water to the point of avoid using the much simpler "there's a river here, so let's just use that" there's quite a lot in the middle; an ocean, in fact (this pun only works in Italian).
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