When it explodes, it will take away a quarter of her life. You must do this 4 times in total. It really feels like a console-esque boss encounter with life bars and patterns of defeation, which is by no means a bad thing. Once you do figure out each Boss' pattern, you will no doubt win, which does take away some of the excitement. When you take damage, each bar will far a bit.
Health is just what it sounds like, and required the standard health-potion or fruit to restore.
Water can be replenished by finding vials of it or simply standing in a water source such as a fountain or waterfall. The enemies are greatly varied and interesting. Most of the models are a bit creepy, adding to the excitement factor. The enemies are, in m opinion, harder to defeat than the bosses as they don't really follow a set pattern. The monsters will sometimes appear out of no where and surprise you from behind.