Water is called a ‘universal solvent' because water can dissolve much more substances than any other liquid found in nature but water cannot dissolve every substance.
For example- water cannot dissolve fats, waxes, and hydroxides due to the low solubility of oppositely charged particles.
Reasons for the solvency of water are:
Water molecules consist of a polar arrangement of hydrogen and oxygen atom.
Hydrogen present on one side has a positive charge while the oxygen atom carries a negative charge.
These charges help the water molecule to bind to different types of molecules.