Water doesn't get compressednot really (Water is compressible—not much, but enough. Also, I'm not sure why you would say this, as it means that there is less room for added gas—a more compressible liquid would "make room" for the added gas as the pressure increases...)
you can inject any amount of gas into the water tank, as long as it can hold that pressure.not really (at some point the pressure is high enough that it will liquify, and then there is less compressibility)
The reason to use water is to make hydrogen less dangerous during transportationHow? I can't think of any benefit from adding water. It just means that higher pressures will be needed to store the same amount of hydrogen (which is more dangerous), and more mass being carried (requiring more energy). If the hydrogen catches fire, the water won't do anything to stop it...