Water is considered to be a universal solvent because more substances dissolve in water than in any other chemical. This is due to the unique polarity of water molecules.
The hydrogen molecule in water carries a positive electric charge, while the oxygen side carries a negative electric charge. Water dissociates ionic compounds into their positive and negative ions. The positive part of an ionic compound is attracted to the oxygen and the negative portion of the compound is attracted to the hydrogen. Despite being called the universal solvent, there are still many compounds that water does not dissolve or does not dissolve very well. If the attraction is high between the oppositely charged ions in a compound, then the solubility of the compounds in the water is low. Water does also not dissolve non-polar compounds, such as oil.