Germany: Takes third option and buys bottled water. Part of the reason is that carbonated water is really popular, and home carbonators are usually kind of difficult/annoying to clean properly. Also, restaurants often won't serve tap water due to greed.
The amount of bottled water in the EU is insane, lol. I'd always Google it just to be sure, but the tap water is always drinkable, so I try to do that instead of buying a ton of bottles (or getting them at restaurants. I wish parts of the EU had more water fountains and refill stations for metal water bottles.
I'm guessing it's more of a cultural thing from the postwar reconstruction?
As a EU citizen I always buy my water bottled instead of from the tap, not only does it taste better.. but my family used to have a water distiller when I was growing up and we sometimes put tap water inside of it and after the distilling process the residue left was disgusting and gooey, even with some rust laced in (this was in the Côte d'Azur for context) in comparison most good quality bottled water just left a trace mineral residue. Safe to say I'd rather drink mineral residue over rust!
I've never lived in a place where the water isn't drinkable, but I've seldom drank from the tap without filtration. Water is so vital to us, it just seems wise to be careful.
I'm Canadian, living in Canada. I grew up drinking unfiltered tap water (municipal water) all my life and still do. My tap water has always tasted fine to me and I have no health issue. I prefer my tap water over soda, juices, sport drinks or flavoured water etc, which has too much sugar.