This is where the game really gets fun. It should be nuclear waste or something, based on the way you fry when the water gets poured on you. Anyway, each weapon is unique. For example, the time bomb causes the room you set it in to fill with invisible gas, which kills the next person to step in the room if they don't get out in time. You'll notice that you stepped into a gassed room by your face turning a bluish hue.
Every weapon also has a way to disarm it.
Simply walking out of the room defeats the time bomb. If two spies end up in a room together, you can fight each other. You can only punch, unless you find a knife or club to deal out more damage. Controlling your spy may take a little getting used to. Once you're familiar with the controls, you shouldn't have any problems setting traps and fighting.