Brake fluid absorbs moisture from the air readily so you should only use fluid from a sealed container and make sure that the bike's fluid reservoir is tightly sealed. The water is heavier than the fluid so it sinks to the lowest point in the system down near the slave unit. This area sees engine heat directly and the water boils when it gets above 212°F.
You often need to disassemble the line at the slave to remove the water that collects. The slave geometry makes it hard to flush the water out.
[Edited on 6-7-2005 by Shazaam!]