Another part of the foiling for the Water Pan is that you want some sort of "gap" between the hot lower side of the Water Pan (which is exposed to direct radiant heat from the charcoal) and the fat dripping from yer meat.
Fat coming into direct contact with directly-heated metal = potential grease fire and major ruined meal.
Some guys use balls of foil or simply stretch the foil across the top of the Water Pan to creat an "air gap" between the Water Pan bottom and the foil that will be catching the dripping fat / juices. If you do this, you still want the top surface of the foil to act like a "bowl", to catch the drippings & fat. If you make it too flat on top, fat will collect, run-off into your fire, and FOOM! Unless your fire goes totally bonzo, foiling it with proper "dishing" should be enough to prevent grease fires.
The Clay Pot is another way to accomplish the air gap, plus the thermal mass of the clay material acts as a heat-sink.
Then there's the clean-up part. When you're done cooking, you can just peel-off the foil once it cools and you're left with a much smaller clean-up job.
I foil the bottom of the water pan for clean-up, but I still use water in the pan. Although I trust that it will work without it - Weber DID spend bucks in Engineering, and the Water Pan was part of their design to make it easy to control.
Hope this helps