Well... yes and no re: water on the fire. If only putting out a fire in a given location is required, then bazmmore's description is fairly accurate. However, often times, especially here in the western U.S., a fire-line is required to be built. This is an area, sometimes a mile or more in length and at least 50 feet wide that acts as a fire break. It's built to keep the advancing fire from progressing. In these cases, a mixture of a clay like substance (naturally occurring and mined) called bentonite, water, coloring and fertilizers is mixed together in large tanks at the ground base and then pumped into the aircraft's holding tanks.
The red coloring is used to provide a visual guide for each successive aircraft to build the fire line. The fertilizer helps kick-start the regrowth of vegitation. Often, a small amount of a soapy material is mixed in as well to help the fire retardant bentonite adhere to leafy undergrowth. An additional benefit of this mixture in actual fire extinction is that it is quite heavy per cubic yard and drops with such force that it momentarily pushes all the air away from an active flame. In fact, fire fighters on the ground have been injured by being in the wrong place and being hit with the slurry. Not often seen in videos of the action is a smaller "lead" plane to guide the larger, less manuervable slurry bombers. For a number of years, I flew the lead planes on several large fires in National Forests when I had time off from flying airlines... The lead plane flying was deffinitely more exciting...