Where does the water come from? I can see that in Markarth the waterfalls are fed by mountain streams. Whiterun, and Dragonsreach are in the middle of the tundra of Skyrim. Is there a really giant spring under Dragonsreach that is never talked about. The water pours out at a very high rate. Sorry if I'm being silly. It is just a glaring curiosity for me. I thought maybe someone who followed the games development of a dev might know an answer.

Ha, I noticed that, hopefully it's not the overspill of the latrines in the Jarl's palace.

Dragonsreach was constructed at the top of a giant Geyser.

Would be nice if we got to see the source of all that water in game or an NPC handwaved the entire issue.

On a similar note, I looked in great detail at the water in this game; specifically in Whiterun. I know how hard it is to get water right in games and Skyrim has pretty much hit the nail on the head. Sometimes in the waterfalls it looks a bit solid as opposed to liquid but in general it's amazing. Maybe I'm being old-fashioned and used to old games where the water was terrible but it added to the long list of things which amaze me about this game.

In regards to the OP's question, it's an interesting thought. I think the most likely water is that the hill beneath Dragonsreach is a natural spring.

The water comes from the guards barracks.

Artesian wells. When a nearby mountain has a higher watertable than the city, a well drilled to it (or formed naturally) will cause a presurized spring called an artesian well. Google it.

http://en.wikipedia.org/wiki/Artesian_aquifer

The water contains a special mineral, that is magnetically driven from each of the Twin Moons, the magnetic drive however is just enough for the water to be pulled from weak areas in the ground, Whiterun is located on one of those spots.

Beat me to it. People think mountains are solid, too. But they are often riven with water courses in thin seams. That's why tunnels have to be sealed from the rock and have prodigious water handling abilities.