If something such as a proposal, speech, or statement is watered down, it is made much weaker and less forceful, or less likely to make people angry. Proposed legislation affecting bird-keepers has been watered down. see also watered-down = tone down
If you water down a substance, for example food or drink, you add water to it to make it weaker. You can water down a glass of wine and make it last twice as long I bought a water-based paint, then decided to water it down even more. = dilute