It's a painting technique when applied with water-soluble, highly transparent paints. These are aqueous paints made from finely divided vegetable, animal or chemical pigments and a water-soluble pen (usually gum arabic) with some impurities (honey, glycerin and preservatives, usually phenol).
There are two main techniques for making watercolor - dry watercolor, where the colors are mixed into layers of different colors, and the paper is allowed to dry between coats, and wet watercolor, where the colors are poured and mixed on a special (roughly corrugated) watercolor paper. Japanese and Chinese watercolors and ink techniques are quite close to the latter.
Watercolor, especially wet watercolor techniques, is considered to be a type of painting that requires great (perhaps the greatest) mastery: mixing colors, their penetration into the paper, overlapping, dissolution is very difficult to predict, at the same time, the painting has to be painted quickly by drying the paint. the strokes remain indelible, so mastering watercolor takes many years of practice.