You used to see the little jugs in Yorkshire
In the Mapp and Lucia books by E F Benson, the Major and Captain Puffin meet in the evenings for whiskey and gossip. The Major takes it neat while Puffin keeps a kettle of warm water in the fender and adds a sugar cube and lemon juice.
drops of warm water are used in cheaper whiskies
Yes, you're right. Apparently it helped a rough whiskey to go down more easily. But Irish whiskey is never that rough. Historically it's much smoother than Scotch.
I prefer to take whiskey in a cup of tea, that's very Irish :) Years ago the lady of the house would always ask the male guests 'Will you take a drop of something in that?' meaning whiskey.