Kohn-Sham density functional theory (DFT) has become established as an indispensable tool for investigating aqueous systems of all kinds, including those important in chemistry, surface science, biology and the earth sciences. Nevertheless, many widely used approximations for the exchange-correlation (XC) functional describe the properties of pure water systems with an accuracy that is not fully satisfactory. The explicit inclusion of dispersion interactions generally improves the description, but there remain large disagreements between the predictions of different dispersion-inclusive methods. We present here a review of DFT work on water clusters, ice structures and liquid water, with the aim of elucidating how the strengths and weaknesses of different XC approximations manifest themselves across this variety of water systems. Our review highlights the crucial role of dispersion in describing the delicate balance between compact and extended structures of many different water systems, including the liquid. By referring to a wide range of published work, we argue that the correct description of exchange-overlap interactions is also extremely important, so that the choice of semi-local or hybrid functional employed in dispersion-inclusive methods is crucial. The origins and consequences of beyond-2-body errors of approximate XC functionals are noted, and we also discuss the substantial differences between different representations of dispersion. We propose a simple numerical scoring system that rates the performance of different XC functionals in describing water systems, and we suggest possible future developments.
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