Not a fattie expert here. But I will give you what I know.
It depends on how hot you going to smoke for the thickness of the bacon. If you go the low and slow I would go thin, if you go hotter side (275+) you can do thick. What I found was the bacon was still on the not crisp on the thick when I did my first ones. The next batch we used thin and it was better. We like crisp bacon here. The crisp bacon does make it more difficult to slice. We did a weave both times.
We used smoked bacon. I try to get a different smoked then what I am using to get a bit different flavor layer.
When you say water in the pan or not. I am assuming the pan in the smoker, not a pan to place the fattie in. I use a modified off set smoker, so I did not put a water pan in. I would say if you want some crispness to the bacon, I would not put water. But if you want to make a sauce from the drippings. I would place a pan under the fatties with some mirepoix in it and a can of diced tomatoes. This will smoke the vegetables a bit and save all the yummy drippings. When done and letting the fatties rest, place the mirepoix (1 cup onion, 1/2 cup carrot and 1/2 cup celery) in a pot with some beef stock (4 cups) and bring to a low boil. If you have a hand blender you can just purée everything in the pot. I will place mine in the sink when I do this, just in case it splashes. If you don't have a hand blender you can use a food processor or blender to do the same thing. Just be very careful when you turn them on and don't over fill them. I place a towel over them before turning on. I have had the lids not keep the very hot liquids in and make a mess. Luckily I was not burned. Adjust seasoning with salt and pepper. If you want a darker brown color you can add a bit of Kitchen Bouquet to it.
For a silky smooth sauce use the blender.
For a richer sauce add whole butter ( not margarine ) to it. Once you have done this do not put back on the heat. You will break the emulsion and get an oil slick on top.
Good luck and don't forget the Q-Views....