Baking beautiful bread requires the skillful manipulation of three big, messy variables: technique, equipment, and ingredients. Poor technique accounts for most subpar results, but a sudden change in kitchen conditions or ingredient availability can throw even a seasoned baker for a loop. If your bread has started acting up for seemingly no reason, your water might just be the culprit.
Tap water has two qualities that can hinder a leavened bread situation: chlorine content and hardness. Compounds containing chlorine, specifically monochloramine, are used in water treatment because they kill dangerous microorganisms at extremely low, potable concentrations — but this means they can also kill yeast. As for mineral content, excessively hard water (which has elevated levels of dissolved minerals) inhibits a good rise due to its increased alkalinity. Our small, yeasty friends flourish under just-barely-acidic conditions, so forcing them to develop in a strongly alkaline environment is, at best, counterproductive.
The vast majority of potable tap water doesn't contain enough chlorine or minerals to interfere with baking; generally speaking, bread leavened by yeast will do just fine under all but the most extreme water conditions. In my experience, though, naturally-leavened doughs — particularly sourdough starters — can be quite sensitive to water changes. I suspect this comes down to metabolic differences between leavening agents. Instant (or active dry) yeast is pretty vigorous and can be added to the dough in large quantities, both of which encourage a rapid rise across a variety of dough conditions. The wild yeast and lactobacillus bacteria in sourdough work much more slowly, which requires longer exposures to the various chemical compounds dissolved in tap water — and increases the likelihood of an undesirable reaction.
Home baking forums are filled with threads on water quality; some folks will even selectively remineralize distilled water in order to precisely control the chemical makeup of their starters. Frankly, this is some next-level control freak shit: all other things being equal, if your tap water is potable, it's probably fine. However, if your water is heavily chlorinated, extremely hard, or very sulfurous, try filtering it before adding it to bread dough. Philadelphia tap water (excuse me, "wooder") is pretty chlorine-forward, and switching to filtered water was a total game-changer: our starter no longer makes hooch way ahead of schedule, sourdough loaves ferment fully without inexplicably collapsing halfway through the rise, and yeasted doughs rise up tall and airy.
Filtered water won't magically fix loaves that are under-kneaded or over-proofed, so make sure your technique is solid before blaming your water for bad bakes. But if your tap water is unpleasant to drink — or hard enough to require regular de-scaling — a filter might be just what you need to start making gorgeous loaves of your very own.