It indicates that the next word will be a direct object (the person or thing that's receiving the action). If we were to do the same thing in English, it would look like this: "The cat drank [את] the milk" or "The boy hit [את] the ball" or "The child wasted [את] his allowance."
In this case, it came before "כל" because technically, "כל" is the object in this sentence. It is a noun in Hebrew, you can say "הכל" for example, because in Semitic languages the distinction between nouns and adjectives is more fluid than that in European languages. OK, fine so "כל" is the direct object, but why is it definite in this context? Because when something is possessed by something definite, it's definite. Compare how in English you'd say "all of the water", as if "all" belongs to the water. The Hebrew construction is semantically similar, so since "כל" is possessed by "המים", it becomes definite in itself.
And a definite object is preceeded by "את", regardless of whether it's definite because of a ה-, or because it is a pronoun, a demonstrative, or even a whole clause. This very skill has a sentence that says "בירה משנה את איך שאתה חושב" ("Beer changes how you think.") In this case, we use "et" because "how you think" is a particular way of thinking. Consider how "how you think" can just as easily be replaced with "the way you think": "Beer changes the way you think."
However, there are DL sentences where כל המשהו doesn't take את. Just five minutes ago, I ran into something like כלבתה אוכלת כל האוכל, with no את. (Unfortunately I don't remember the exact wording, but I remember thinking "why isn't there an את?") And I'm pretty sure I've also run across sentences with verb + הכל, with no את.
Bottom line: We all agree that את is the marker for a definite direct object, and some examples, like the boy hit the ball, are unambiguous. But Hebrew has rules for what "definite" means that are very different from English, and sometimes they just feel random. (Also different notions of what a direct object is, as with יש לי את) Anything you can say to clear things up would be appreciated!
I am not trying to be picky, but I want to make sure I understand the placement of exclamation marks. In the Hebrew solution, the exclamation mark is all the way to the right. Is this where it is supposed to be? Or is a technical glitch that I also have when typing Hebrew letters and English characters?
Exclamation points are supposed to be displayed at the end of a sentence, like any other punctuation. In Hebrew that's on the left. In many other languages it's on the right. Have you tried mixing English and Hebrew within one paragraph? The quotation marks don't go where they belong, the punctuation is all over the place, the orientation may just shift without your consent and G”d forbid you try to edit what you've typed. It's a ride.