Water is often referred as a universal solvent because it is capable dissolving much more solutes as compared to any other solvent. This is because, water is a high polar molecule. In water, H has partial positive charge while O has partial negative charge.
Due to this, water favors dissociation of molecules into positively and negatively charged ions. Positively charge ions gets attracted towards oxygen i.e. negatively charges, while negatively charged ions get attracted towards positive end of water molecule.
However, it is worth nothing that, despite water being referred as universal solvent, many compounds are insoluble or partially soluble in water. For instance, most of the hydroxide displays poor solubility in water.