what's inside a rocket
Having the compressed air as fuel is a good idea because it has little weight for the amount of energy it stores and doesn't load down the rocket. At launch, most of the water-bottle rocket's mass is water. And with air packed tightly inside, the rocket has lots of energy. When you finally let water start streaming out of the bottle, the compressed air pushes downward hard on the water and the water pushes upward hard on the compressed air.