To massively oversimplify, the Japanese religion of Shinto follows many principles concerned with flowing water and purity. Your actions should mirror the properties of flowing water, for water which flows is pure. Conversely, water that stagnates becomes polluted - a breeding pool for impurities such as parasites and disease. It is a source of illness, or as the Archangel equates it, distortion.
Several items and concepts in Baroque reference these principles, such as the Wastewater item or the "pure water" Eliza seeks. Wastewater is described as "corrupted water" or literally "kegare water". 'Kegare' is a Shinto concept pertaining to a type of impurity that stains the very being of any person that comes into contact with it; this impurity often spreading via liquids that have ceased to flow (such as spilt blood). In game, ampoules filled with this stagnant Wastewater will make you weaker, but will make Abnormals stronger. This is because their delusions have caused them to emotionally stagnate. They are physical embodiments of mental stagnation; the polar opposite of motion-inducing chemicals like noradrenaline. Adding more stagnation in the form of Wastewater makes their delusional, stagnant mindset even more distorted, and therefore more powerful.
This stagnation applies not only to humans, but to God itself. Eliza refers to Idea Sephiroth - the information comprising matter - as "pure water". The Coffin Man states that there is "no pure water left in the world". As the player can clearly see, all the water outside has turned a sickly, stagnant green. This "pure water" he refers to is written exactly the same way as the "pure water" Eliza seeks. Considering that Eliza and the Heart Reader both confirm that the world itself is God's language, this means that water is the flow of information through the world. Fitting, as water comprises the majority of all living beings and is the source from which all life originally evolved.
Eliza is specifically seeking your water, your "pure water", because it contains the ability to purify and probably also because it is the only pure data left in the world. Number 12 is a clone, and therefore relatively fresh and physically undistorted. By reading this comparatively intact data, God hopes to correct some of its own data. Alice points out that this effort is in vain, as God cannot possibly hope to gain the amount of information necessary to correct the extensive damage through this endeavour. All this process accomplishes is allowing Number 12 to view his lost memories and come to terms with his guilt - enabling him to cease the endless (stagnant) cycle of resurrecting his dead twin.
Shinto traditionally holds a lot of misogynistic and other hateful views, and games that invoke these themes usually suffer from the same shortcomings. Baroque, on the other hand, uses these themes to further illustrate the primary neuroscience themes of the game, while also refuting the core tenets of Shinto. The ideal of purity and purification that Shinto so adamantly demands of its adherents is directly stated to be a mere delusion. The world is distorted and impure by its very nature, as are the humans who live within it. As Thummim says, in a world where everyone is distorted, it is wrong to judge people for their distortions.
This attitude championed by Baroque is in stark contrast to most JRPGs. The standard JRPG plot generally involves heroes who must overcome fate to save the world, usually through emotional willpower and the power of friendship. There is no saving the world in Baroque. Everything disgusting and terrifying you encounter cannot be gotten rid of, it's just the way life is.
The term "Baroque" originally referred to irregularly shaped pearls, distorted by impurities trapped inside during their formation. This is likely why Idea Sephiroth look like pearls. The moral of Baroque, however, is that the distortion is an integral part of the pearl, not something that can be removed.