The important part is the world interaction upgrade and it's fairly complicated as it does four different things depending on what it's pointing at. All of what it can do I'll list here, you can also check NEI for this btw. In all case multiple upgrades stack I believe, too many and you get diminishing returns though.
- Pointing it at a block of cobblestone adjacent to a lava and water source blocks will cause it to generate cobblestone.
- Pointing it at a crafting table will make it automatically craft using inventories behind the crafting table in the way it's facing, a 3x3 grid of inventories directly maps to the crafting grid.
- Pointing it at nothing will cause it pick up any items that are in front of it, it can be filtered as normal making it great for automating AE2 crystals under normal circumstances. Autoclaves kind of make it redundant there.
- Pointing it at a water source adjacent to two others will cause it to generate a bucket of water a second, the same as a thirsty tank or reservoir, it's advantage is being much more space efficient, you can get a few hundred buckets a second with five stacks of world and one stack of speed.
So yeah, generally unless you're trying to do something nuts like power a couple of max big reactors you should never need more water then a single transfer node will supply. For most cases though the thirsty tank would be more then enough and it is the most compact requiring only two blocks where the others require 3/4.