The Water Diviner is a tool added by Witchery. It is used to determine if there is a Water block beneath a block. It has a seemingly infinite range below the block. If there is Water, it will emit black particles; if there is no Water, there will be no particles emitted. It does not use durability if there is no Water beneath the block it is used on.
The particles settings in the Options menu must be set to "Decreased" or higher to be able to see the particles.