What is the use of canals?

I am fairly new to Cities Skylines and not a heavy gamer. I cannot figure out what functional role, if any, canals play. Are they purely aesthetic, or do they change how the game works in some way? Can I use them to build a city which works better, not just looks better? If yes, how?

Small boats aren't available in the game and it doesn't look like ocean liners would fit in there.

I have the After Dark expansion, but no other DLC.

Solution 1:

Canals have a variety of purposes from aesthetic to functional. Some players make like having canals run through their cities for looks while others may use them to direct sewage to certain areas.

Directing sewage to another area is both aesthetic and functional since sewage affects cim health and reduce land value.

Do not, however, make a canal for only sewage that does not connect to a water source. That will overflow and cause flooding over time. Bodies of water in the game have water sources that add water if it is below a value and removes it when above.