Lava and water affects will make a block near them affect the player. For example if there is a block you character is touching that has a lava block touching it, it will effectively become a lava block. It will slow you and deal periodic damage, it will not set you on fire or spread, its not invisible lava just a block that gained an attributes to both deal damage and slow. The effect for water is much the same but it only slows. it doesn't drown you or anything.