What does it mean when a vessel is described as 'making way through the water'?

A vessel 'making way' is physically moving through the water under her own power or sail. This is distinct from 'making way over the ground', where the vessel moves relative to the seabed (which can happen by tide alone). Under the COLREGs, whether a vessel is 'making way' or 'underway but not making way' affects which lights and sound signals she must show.