It is NOT separated into two levels of severity. After receiving pardon, a large but unknown amount of punishment remains to be expiated in purgatory. It is not accomplished with water.
Catholics believe that through the mechanical application of water, regeneration is imparted.
In scripture, baptism follows regeneration. But in every nation he that feareth him, and worketh righteousness, is accepted with him. And he commanded us to preach unto the people, and to testify that it is he which was ordained of God to be the Judge of quick and dead. To him give all the prophets witness, that through his name whosoever believeth in him shall receive remission of sins. While Peter yet spake these words, the Holy Ghost fell on all them which heard the word.