Water effecting Land Climate?

Question

Why does the presence of a large body of water moderate the climate of land nearby-making it cooler in the summer and warmer in the winter

Answer 1

Water is considered a 'thermal heat sink' - it warms and cools slowly.  This allows it to remain cool into the summer and when it finally gets warmer - the seasons change and it's heat now helps warm the cooler winter months.

Answer 2

In addition to Lorax's good answer, bodies of water also evaporate placing water vapor in the atmosphere.  Water vapor is a greenhouse gas (like CO2) that effectively insulates the air close to the surface.  

The greatest temperature fluctuations are seen in a dessert with no clouds or water vapor overhead. It can go from very hot in the day to quite cool at night.