One of the reasons we've used it for centuries is that in the days before treated water it was safer to drink. Microbes in water had the potential to make you very sick or even kill you. Even today, if you're traveling to a location where the water supply is suspect, it's safer to drink beer instead of water.
This is a popular misconception according to the askhistorians faq. I don’t think you’ve ever had beer either, thinking that you could possibly replace water with it.