water comes from the pump bowl, which is pressurized. VERY pressurized. from there it goes to a gate valve (and hopefully a pressure regulator, which drops pressure down to a lower psi and dumps the excess overboard). the gate valve controls flow and thus engine temperature. from the gate it goes into the water inlets in the front of the engine. once it exits the engine at the thermostat housing on a boat with headers (judging by the pix you posted you have "over the transom headers)" one of the exits is split and sometimes goes to a valve or a RPM solenoid and runs to the header injectors where its then turned into steam and blown out the exhaust to cool the headers. the other dump from the thermostat goes out of the boat back into the water to warm up the fishies.
if you search the site (top right corner) you'll find LOTS of diagrams, pictures, and talk about cooling.
