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Not seen much these days . Used to be that most outdoor eating places used them , it was thought the sun reflecting off  and through the water bags made flies avoid the area but as I said you don't see it so often these days. The secondary use was at the end of the day there was plenty of  FREE Hot water for clean up.

In the USA over the last couple of decades, it has become a popular method used by horse owners, and dairy farms, mostly in the south. It works best where there is a limited number of entrances, and apparently putting a penny or other small dark object in the bag helps.

Another technique from the American South is to paint the underside of eaves and porches "Haint Blue". It is a pale sky-blue color that seems to keep insects and birds from building nests there. When I had my Mennonite house in Placencia repainted in early 2018, I used Haint Blue on the ceiling of our large porch. So far no critters have built nests there, and as we spend a lot of time outside there, it is a very pleasant color.

Most paint companies list  several shades of Haint Blue in their color mixing charts.
It must not be popular in Belize, as I had to call the US manufacture (Sherman Williams)  to get the color code, as the large Belizean dealer did not show it in their mixing chart.

Supposedly - a shiny penny inside a clear bag of water - hung where direct sunlight can shine onto the bag and penny - resembles a spider to a fly.  A previous poster is correct - many horse barns down here in the southern US still do this. 
In the meantime - most horse barns - ours included - now use professional misting systems - they work great and flies are non-existent.
May get one for our house down there when we build ; )

Is there a chemical in the misting system that helps with the flies?