The primary advantage of watercooling is its ability to transport heat away from the source (a transistor) to a secondary cooling surface (a radiator). This allows for large, more optimally designed radiators rather than small fins mounted directly on the heat source.
The disadvantage of watercooling is higher cost and complexity when compared to air cooling.
The picture below shows the components in a watercooled system. In my project, the PA transistor is soldered directly to the copper water block. The radiator is mounted on top of the cabinet and cooled by two large 140 mm fans. The pump and the reservoir is one single unit making the system more compact.
OZ1BXM Lars Petersen