Google the term "protein skimmer". In essence, dissolved organic compounds will be caught up in the surface of the bubbles, creating a foam that can be skimmed off. This is bad.
If you're gonna aerate your water this way, do it BEFORE adding nutes, or you'll just take them out of solution.
It will definately help tap water by accelerating the escape of chlorine, as chlorine is a free radical.
I ain't sure of the ratio, but I've heard that peroxide (3%) can be added to the watering can to oxygenate the water.