It's as simple as this: signs around the edge of your field of vision are far less noticeable than signs directly in the centre of your field of vision. Signs around the edge are also far more common than signs directly in the middle of the road. Common events (such as these signs whizzing past) breed complacency and it's a fundamental tenant of workplace health and safety that some of the biggest risk events are not those that are inherently risky or difficult, but those that are performed so frequently that the practitioners become lazy with complacency (example: smacking yourself in the face and knocking your teeth out when undoing a tight bolt because you're pulling the spanner towards you). Driving is such a repetitive task that said complacency is incredibly high as a result, which explains all kinds of road phenomenon that you'll witness on a daily basis and wonder 'what the HELL was that idiot thinking?!?'.
In the rail industry, level crossing incidents are way too common. I recall one several years ago that killed the two train drivers when a B-double ran a crossing and ripped the oncoming train right off the tracks when the train ran in to the trailer of the B-double. The report ([1] specifically sections 2.3.7 and 2.3.8 starting PDF page 72. Fascinating reading about human factors of accidents if you're in to that) made it very clear that the truck driver failed to see the flashing lights and associated signage alerting that a train was coming. As a result, he failed to stop. Importantly, it notes that it is entirely possible to miss major changes to your environment (big flashing signs, in the tunnel case) if your attention is elsewhere.
Couple that with the fact that driving long distances for extended periods can be almost hypnotic, especially at night and when fatigued. Driving becomes almost automatic. Ever driven a long distance and realised you don't actually remember specifics of the journey? Yeh. These guys are going to be driving at night (due to being in the middle of a major city) where lights from billboards, etc. are surrounding their field of view. It's like driving through a star trek warp speed tunnel with lights flashing past your field of view constantly. That's hypnotic and you zone out as a result. As such, the driver's attention levels are pretty much nil and no low-hanging beam is going to snap him back to reality.
By throwing something completely different directly in the field of vision, the driver is immediately snapped back to reality in a big way. Your attention is (usually) mostly focused on the road in front of you when you're driving, even when you're distracted. Furthering the extremity of the reality check is that it's a gigantic 'STOP' sign - not just the word stop, but the word stop in the big red hexagonal sign. The sign is designed to provoke a response by its shape and colour (we're conditioned to hold that meaning to said shape and colour) and throwing it immediately in front of the driver will grab their attention in a way that bars and chains and all that simply will not.
In summary, by using a sign directly in front of the driver rather than through some secondary communications medium (e.g.: banging on the roof of the vehicle), the likelihood of detection and subsequent reaction is far higher. It will succeed where other mechanisms of alerting will fail. Water is used because it's convenient, doesn't cause lasting damage/debris and can be deployed very quickly. For the benefit such a design brings (avoiding blocking just about the biggest express road thoroughfare in Australia's largest city), the upfront cost is negligible and is easily justified over cheaper but less effective alternatives.
[1]: http://www.tmr.qld.gov.au/~/media/Safety/railsafety/safetyre...