The water is being used as a refrigerant. It is OK to release this refrigerant as it is only water and as far as we know it does not effect the ozone layer.
It is the evaporation of the water that cools the air just like when your sweat dries off your skin it cools you down.
Now that works well except for when the air is saturated and can not hold anymore water, then it just blows wet air.
