it usually means the latter of your two choices, that there is no such thing as too much chocolate.
it only means the first one when you're telling someone what to do, if you're in a position of authority, like their parent.
The reactor heats water to create steam.. this steam is used to make electricity. The more water you add... the more steam and electricity you get.
There are turbines and generators involved too.
the radio active material (uranium) becomes very hot when it is in use, so in order to prevent a nuclear meltdown they keep it cooled down by keeping it submerged in water. The steam is also used for additional energy, which the more water the more steam.
One uranium pellet the size of a peanut can power more than 10's of thousands of tons of coal, and if the waste is disposed of correctly is the cleanest and most efficient form of energy, dispite what you hear from all the environmentalists
It can mean either of those things.
It's likely, however, that it means "You can put lots of water in a nuclear reactor and it's never too much."
If you wanted to warn about the overuse of water, you would probably use shouldn't or mustn't.
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