In essence, fluoride reduces tooth decay and helps prevent holes or cavities from forming on your teeth, but it also acts in additional ways to benefit your tooth health.
Prevents cavities- Fluoridated water creates low levels of fluoride in your saliva, which reduces the rate at which your tooth enamel demineralizes (preventing cavities)
Fights existing cavities- Fluoridated water also helps to increase the rate at which tooth enamel re-mineralizes (fighting existing or newly formed cavities)
Many countries have naturally fluoridated water making additional water fluoridation unnecessary.
Other countries and populations find water fluoridation unnecessary because of alternative methods of fluoride intake like specialized salts or fluoride based toothpaste invented in the 1970s. The debate is contentious as to whether or not water fluoridation is still necessary in the U.S., but its use may still be justified as long as vast inequalities in dental and health care exist.