The mandate of the FDA (as well as whatever the EU equivalent) is to mitigate risk to public health by regulating certain marketing statements. They compute risk using this formula:
total risk to public health = (impact of the medical condition indicated by the product if not treated) + (impact of the product if misused).
Obviously water has a pretty low impact if misused in general. However, dehydration (the clinical condition) is extremely serious if not treated, and the impact of misuse of water to treat dehydration is significant. Moreover, for over-the-counter products, claims are generally restricted to indications for "self-limiting" conditions (those which would go away on their own without treatment such as a cold or a rash), dehydration isn't necessarily a self-limiting condition.
So, the bottled water companies tried to weasel around this by claiming that water is good for preventing "development of dehydration" (rather than for treating dehydration, which they *knew* would never get approved). However its also the case that factors leading to development of dehydration are not necessarily self-limiting, and are not necessarily treatable with consumption of water.
For example, I actually know someone who developed hypotonic dehydration after consuming significant amounts of water (in an effort to prevent dehydration, which he was at risk of due to other factors). Anyways, the water didn't help (it was retained in the body but not in the blood), and a number of rather serious medical complications resulted. If it were not for medical intervention he would have died.
The FDA doesn't prevent people from self-diagnosing and self-medicating, and they don't restrict medical information in general, but they do prevent companies from making marketing statements that would contribute to an increase in risk associated with self-medicating.