You can find Water on the menu's. I will post a picture of the location on both menu's. From what i've gathered you can replace with water and replace water with another block but you can't fill with water. If you are wanting to fill something with water just fill it with a certain block and just replace that. You can no longer flood with water and lava, it's been removed for some reason, although i'm sure this got removed in an Xbox Update a while back.