Both types of units are totally self contained air conditioners with refrigerant and compressors. Air conditioners need a way to reject the heat from the room. Air-cooled portables use air to reject the heat out of the room by ducting the unit above the ceiling tiles. A water cooled unit uses water to reject the heat. So, there has to be a water supply and a hot water return. This can be accomplished with chilled water loop, condenser water loop, or process water loop.