This is one of the rules of past participles agreement.

Verbs take either avoir or être as an auxiliaire when conjugated in passé composé, plus-que-parfait or any other composed tense. I’ll use the passé composé for my examples:

Manger (to eat) → Je mange (I eat/I’m eating) → J’ai mangé (I ate/I have eaten)

Tomber (to fall) → Je tombe (I fall/I’m falling) → Je suis tombé (I fell/I have fallen)

The past participle agrees with the subject only if the auxiliaire is être:

J’ai mangé. (male or female speaking)

Je suis tombé. (male speaking)

Je suis tombée. (female speaking)

So voir takes avoir as an auxiliaire (j’ai vu), hence your dictionary example.

Now, why vue? This is the main rule: if the complément d’objet direct is before the verb, then the past participle agrees with it (not with the subject), even if it’s the auxiliaire avoir:

J’ai mangé des pommes.

Les pommes que j’ai mangées.

Les pommes ? Je les ai mangées.

In your case, vue agrees with l’eau (feminine):

J’avais vu l’eau.

L’eau que j’avais vue.

Now, there are many other rules, and some of them are really, really tricky.