Yes it can with mildew dammage and especally water can dammage water sensitive
computers , relays and wiring.

Water or flood nearly always totals a car, because water and computers and wiring are not a good mix. Experience has taught insurance companies that flood cars can not be repaired successfully due to hidden damage and corrosion caused by being submerged in water.

Water is vital in any engine most specially in a car. Water is used to prevent over heating when the engine is running or just idling, it passes through galleries to prevent heat building which would sometimes lead to the breakage of the engine and cylinder head as well. But water is destructive and could really wreck your car. Take for example a car that was flooded, its an s.o.p. not to turn your engine for the water that clogs the piston hole is very hard to drive making your push rod bend which would eventually lead to overhaul and the replacement of new push rods.

Water indeed is destructive

It depends on what you mean. If it was just some rain and rust, then you can normally get that repaired. If you haven't topped up your water levels, then you may have damaged the engine through overheating. However, if you are talking about flooding, then most certainly the damage can be beyond repair - especially if the whole car is submerged! As water can get into the engine, the damp can cause corrosion, rotting, failed electrics, dead computer components etc etc.

A friend once had a motorbike crash into a lake. Despite full oil changes and rescue within the hour, that bike never worked as well after ... sure it ran, but just not in a healthy way.

Well it can make wirings and computer inside a car totally unusable so in a way it will total a car.

The simple answer would be yes,especially if the car was submerged..the electronics could well be toast after a good dunk...However,If you've seen BBC's "Top Gear" Car show,You might have seen them try to "Kill" a Toyota 4WD pickup truck by tying it down on a seacoast boat slipway with the tide coming in,only to have the waves break it free,and wash it away.Afterwards at low tide,it was then found on a nearby beach,half buried in the sand and they dug it out and got it going and running again! I suppose it depends how much effort and expense you might want to put into a fix...but I reckon an insurance company would write off a car that had been sunk..