Royal Navy slang for a navy where alcohol is permitted on board;
IIRC this means the RN, Australian, New Zealand and
Canadian navies. Certainly the RN, and possibly some or all of
the others mentioned, actually have a daily alcohool allowance for
sailors---since Black Tot Day, this is a can of beer per day. Oppose dry navy.

Robert Heinlein has one of his characters (Lazarus Long) use the phrase "wet navy" to refer to any navy involving boats and water, as opposed to "space navy" with spaceships.