Water/Methanol Injection is a great way to make more power safely from a boosted engine. Gas engines enjoy the race fuel like qualities that Water/Meth delivers in two ways. First the water cools the incoming air through the evaporative effect. This is like having a larger intercooler or running on a cooler day. Secondly the methanol slows the burn in the combustion chamber, lowering the knock or detonation threshold in the cylinder. Diesels also enjoy a power increase through the methanol allowing a more complete burn of the diesel fuel. Diesels also see a reduction in EGT, sometimes as much as 250F!
Check out this great video that explains how Water/Methanol works: