I'm not painting this second so I haven't purchased any paint. From what I recall, most water based paints are thinned with water and oil based paints are thinned with acetone or mineral spirits.
If the can says you can thin with water, then by all means thin with water. I have a friend who is a professional painter and I know several woodworker's that specialize in finishing with water-based products. All of them tell me that thinning water-based finishes with water generally doesn't work well.
Especially if you attempt to thin the product by more than 10%.
I think the problem is that the "water" in water-based paint isn't tap water. In most cases, it's a sophisticated suspension of a number of different chemicals: oil-based pigments, mildew inhibitors, crack inhibitors, various organic polymers, etc. You can add water to the mixture, which
will make it thinner, but you won't be able to achieve a mixture that's as complete and thorough as the one done at the factory. The result is that the paint may tend to dry unevenly, crack, have compromised mildew resistance, reduced longevity, etc. I hate painting, so I tend to follow their advice because I definitely don't want to have to redo something a few years down the road.
BTW, what finish would you thin with acetone? I've used mineral spirits, turpentine, and lacquer thinner but never acetone...
Your definition of Floetrol is a little different then the manufacturer who are quick to point out that it is not a thinner.
It may not be a thinner, but it
does thin the paint!
Think about it this way: start with a gallon of lemonade. Then mix it with a gallon of "beverage conditioner". The conditioner doesn't contain any lemons,
just like Floetrol doesn't contain any paint pigment. Do you think the resulting 2-gallon mixture will have the same concentration of lemons? A higher (= thicker) concentration? Or a lower concentration (= thinner)?
The whole point of Floetrol is that it
does thin the paint, almost by definition, but it doesn't compromise the quality of the paint while doing so.