I normally post on this board as "CaribSurfer" but this morning I was unable to login so I created a "second" screen name to answer your question.
The "Water Source" is the area where the aquifer that supplies the government water for that side of the island comes out of the ground. It is called "The Source" as it is the source of all the water for that side of the island.
What the villa owner is telling you is if you wanted to see where the government gets its water you'd only have to walk 5 minute from the villa. It's actually a pretty interesting place to hike. Once there you can see where the water comes out of the ground first as a trickle and then begins to increase in volume as it eventually becomes a small stream and then feeds into the pipes and pumping stations.
Don't worry, he didn't mean you'd have to walk there with jugs or pails and carry your water back to the villa.