The Water Libation was performed with intense joy. Accompanying the Water Libation were festivities entitled Simchas Beis HaShoavah, or happiness of the house of the water-drawing) refering to the waters, which were drawn from the pool of Shiloach (which is referred to as the waters of salvation). The festivities were held in the Ezrat Nashim, which was the courtyard of the outer Temple. Though a relatively small area, miracously, many thousands of happy people were able to crowd in. There was dancing and singing in celebration of the drawing of the water.
Our sages said, "He who has not seen the rejoicing at the Simchas Beis Hashoavah, has never seen rejoicing in his life."
Why was the Water Libation such a happy occasion? It is as if G-d says to Israel, "All your offerings are precious to Me, but this offering of the water which you pour on the altar during the festival is especially precious. Water requires neither planting nor reaping or pressing no purifying. Let it be joined with the wine libation, which requires all sorts of preparations. In my eyes, your wine and water are equal, those that require great effort and those that don’t, so long as you rejoice in me without any mixture of foreign thoughts or ulterior motives." Through the water libation, the Jewish people knew that all their exertion in the service of G-d throughout the year rises to be accepted by him.