Initially the watering can will only water one square at a time. As you upgrade it, it will water more areas and consume less stamina per square watered, too. So, upgrading your can will be beneficial in the long run.
Here's the info from the Japanese wiki. I've translated it as best I could and added notes of my own, but the English version may use different names and terms.
Watering Can
- Received from Dunhill during the event 'Starting Farming'.
- Blueprint: 3 x Small Stone, 3 x Small Branch
- Uses 2 Stamina points per use
- Waters only one square at a time.
- Shipping price: 30g.
Copper Can
- Receive the Blueprint from Iroha in return for presents.
- Blueprint: 1 x Watering Can, 1 x Small Lumber, 5 x Copper
- Uses 3 Stamina points per fully charged use.
- Waters 2 squares per fully charged use: The square directly in front of you, and the next square beyond that. Produces a small raincloud that can obscure vision, though, so mind how you go.
- Shipping price: 2040g
Silver Can
- Receive the Blueprint from Iroha in return for presents.
- Blueprint: 1 x Copper Can, 1 x Lumber, 3 x Silver
- Uses 5 Stamina points per fully charged use.
- Waters 4 squares per fully charged use: a 2 x 2 square.
- Shipping price: 15640g
Gold Can
- Receive the Blueprint from Iroha in return for presents.
- Blueprint: 1 x Silver Can, 1 x Lumber, 2 x Gold
- Uses 7 Stamina points per fully charged use.
- Waters 8 squares per fully charged use: a 2 x 4 rectangle, i.e. one whole field.
- Shipping price: 30890g
Master Can
- Receive the Blueprint from Iroha in return for presents.
- Blueprint: 1 x Gold Can, 1 x Black Lumber, 1 x Diamond
- Uses 10 Stamina points per fully charged use.
- Will fully water all fields which fall, even by one square, within its 7 x 7 square range. As long as one whole square/one crop of the field fits within the range, that entire field will be watered. It is perfectly possible to water six fields at once in this way, possibly more (?). That's 48 squares in one go! Also produces a rainbow over your head when it's done. One fully charged use consumes the whole can.
- Shipping price: 61940g
Other notes on the Watering Can:
- To use your Watering Can: equip it, fill it at a pump, face your target, and press A.
- To charge up your can, press and hold A to show the range. Release A to water all the squares within the range, or more with the Master Can.
- Once powered up, you can then press B (without releasing A) to cancel watering. This is more useful with the more powerful cans. Don't waste water!
- All cans will water either one square, or their maximum range (provided they have enough water). They do not power-up through previous cans' ranges.
- You do not need to water fodder grass, trees, or mushroom logs at all.
- Paddies take a lot of water to fill, but as long as you can see blue water in them, Paddies will not need re-watering.
Don't waste precious bricks on Iroha unless you're trying to woo her - she can easily be won over with Moondrop or Magic Blue flowers. You will need bricks aplenty for early Town Regeneration buildings.
I hope this has been useful!