In a closed automotive fuel tank (excluding diesel) the vapor areas is 100% fuel vapor. Any water is either in solution or at the bottom of the tank (unlikely in today's fuel systems).
Gasoline is a quite nasty fluid. It can contain various solvents Including toluene, ethanol, maybe some methanol (but not much), butane etc. It can turn acidic when stored a long time.
The failure mechanism for a newer level sender construction is either mechanical smearing of the printed contacts, or small slivers of plating from one contact to the next.
Also the fuel passes right through the fuel pump, over the armature and around the brushes. Pump motors are slowly going to brushless but currently 99% of production are brush motors.