It actually is water.

The existence of water on Mars has been completely uncontroversial for decades now — it exists in trace amounts in the Martian atmosphere and in large amounts as permafrost under the top layer of Mars' soil. This particular cloud forms when sunlight causes that permafrost to sublimate into water vapor. As it rises higher into the atmosphere, the temperature drops and that vapor flash freezes back into tiny ice crystals to create the cloud.

What has been speculated for decades is whether or not any liquid water exists on Mars (which we now believe it does, but only in very short-lived seasonal flows that evaporate almost immediately in the extremely low-pressure environment).