Hey A P,
the advantage of a water-cooled spindle is that the spindle cooling is independent of the spindle speed (rpm). You may even continue to cool the spindle after it was stopped by programming your VFD to do so (if you connect your coolant pump to the appropriate relay output on your VFD). Water cooling means you can always control the temperature ideally, usually you also have an alarm if temperature gets to high (my cooling station allows to trigger an alarm) which you don’t have with an air-cooled spindle.
What coolant to use can be found with the forum search function, e.g. it was discussed here.
You may also search for “chiller” to see what solutions the forum members use.
The disadvantage is you have to deal with “plumbing”. And if you have the Elite drag chain, forget it. As long as you don’t want to lay extra long water hoses with the dust collection hose (what some people did but I don’t recommend), the best solution is to retrofit a >70 mm wide drag chain anyway, which will also allow you to lay better cabling system easily (possibly later) with more upgrade capabilities (you may upgrade to sealing air to prolong spindle life, add spindle LED light ring, camera, workpiece coolant hoses, lubrication hoses, etc.).
Many users here have retrofitted a serious drag chain, you can buy some in the www for the Onefinity, but if you have a 3D printer, you can make one yourself (see example here). You can also buy 3D files to print some yourself or use the 3D files that forum members posted here, or design your own. You just buy the drag chain links as bulk stock with desired length, and aluminium L-profiles, and then 3D-print the parts that attach to the axes.
With an air-cooled spindle, you just have the spindle power cable (see here for how to make one yourself) and that’s it, for a minimal configuration. The fan sits at the end of the spindle axle and runs with the same rpm as the spindle axle. That’s okay for woodworking, because with woodworking you always want high torque at high speed (which is why you throw the hand trim router away which can only deliver one of both, but not both at same time)
However, you may consider that in order to ensure the life and functionality of machines, in regions with increased humidity, the humidity in the room can be regulated. Electronics should be used within a range of 30% to 70% rH, machinery (especially steel) too, and human comfort is best at 40% to 60% rH.