Tap water is generally safe. Yes, mains break, places occasionally (very infrequently) f up, but overall it is safe.

The source water for drinking water are reservoirs, wells, etc.

Wastewater enters the sanitary sewer system from toilet water, shower water, sinks, etc and goes to a wastewater treatment plant for treatment then to the environment. Some places use wastewater plant treated water to make recycled water. This is generally a cleaner and more treated version of that same water and used for for grass, golf courses, certain agricultural resources, etc… it’s not used for drinking water unless your an astronaut drinking your own recycled urine in space.