There are several people in a line. The person at the end of the line must have some water in their mouth before they go on stage. The success of this skit really relies on this last person who has the water in their mouth. They need to appear to the audience normal; as if they don't have anything in their mouth.
The person at the front of the line takes a sip of water, swallows it (discreetly-so no one notices) and then pretends to whisper something to the person next to them. Then the next person turns and pretends to whisper something to the next person in line. This goes on all the way through the line until the last person. When it's the last person's turn, after hearing the whisper, they then turn toward the audience and spit out the water in their mouth.
It appears that the water has been passed through (from the "whisper") all of the people on line.
Idea by Kat