In Tucson 10%ish of the drinking water comes from reclaimed water (aka filtered sewage). Makes sense in an area with not a lot of fresh water resources. Also in those areas you can have different kinds. You can purchase a non-potable (not for consumption) water source for irrigation. Again, reclaimed water, but it undergoes less filtering and thus is cheaper. Plenty of larger places get a hookup to keep their watering costs down.
It is a very sensible way of doing things and you actually have more control of purity than water that comes out of the ground.