In the style of Victorian-era novels, The Water-Babies is a didactic moral fable. The protagonist is Tom, a young chimney sweep, who falls into a river after encountering an upper-class girl named Ellie and being chased out of her house. There he dies and is transformed into a "water baby", as he is told by a caddis fly -- an insect that sheds its skin -- and begins his moral education. The story, as one might suspect from this beginning, is largely concerned with Christian redemption, though this is fairly well disguised by the standards of the age.
Eventually Tom (and Ellie, who has also fallen into the river and gone straight to heaven because of her "purity") are returned to life and begin living a proper, Christian life as envisioned by Kingsley.
The book was extremely popular during its day, and was a mainstay of children's literature through to the 1920s. Since that time its polemical aspects have diminished its attractions, though it is still widely available.