Ok donig my first Olympic distance and there is a water drop off. What exactly does that mean? Do you folks stop and mix a beverage of choice or just take on fresh water and continue to hammer?
It’s likely an “exchange” where you grab a new bottle and toss the empty.
just to add a bit, the water drop off tends to be 1/4mile or so before the water station. if you have an empty bottle, you get rid of it there, thus leaving room for the one you’re about to pick up. they have these b/c it is a time penalty if you just discard your bottle anywhere on the course (abandonment). also makes easier for the volunteers to keep the course clean.
Stop on the bike… in a race? 
It’s probably a bottle exchange so take bottles that you don’t mind discarding if so inclined. Be careful near the drop-off areas because although the area is 100 times larger than basketball goal, people still find a way to miss and stray bottles could be on the course. If you have never seen a road bike hit a bottle at 20 it taint pretty. It wouldn’t be a bad idea to attend the pre-race talk.
I’m still pretty new, but the two races I’ve done that had bottle exchang you had the choice between gatoraide and water. The gatoraide was in those sports bottles that you can get at the store (twist top nozzle), and the water was in the green gatoraide re-usable bottles.
Those were both longer than olympic (55km bike on one, and 90km on the other), so you’d be best to check what they’re serving at your race.