Waterdeep is the Forgotten Realms equivalent of New York City or Tokyo. It is the center of everything. The person who controls Waterdeep controls the Sword Coast, and the person that controls the Sword Coast controls the entire realms.
The city is ruled by the 12 Lords of Waterdeep. But no one knows who they are, (they keep their faces hidden at all times). It is rumored that Elminster may be among them. But it has never been said for sure.
The city was described in intimate detail in the Waterdeep: City of Splendors boxed set, (For AD&D 2nd Edition). Waterdeep is also sitting on top of the largest dungeon in the world, Undermountain, (which is fully detailed in the "Ruins of Undermountain" boxed set.
Waterdeep was created by gaming mastermind Ed Greenwood