Although your park tickets and Water Park Fun & More tickets are all coded onto the same card, you should view them as two very separate tickets, because they are.
The 7-day park hopper gives you 7 days of admission to any/all of the 4 theme parks each day.
The 7 WPF&M admissions are just that ... 7 individual admissions to any of the WPF&M gates (the water parks, Pleasure Island, Disney Quest, WWoS). The use of your WPF&M admissions is TOTALLY SEPARATE from your use of theme park tickets.
Let me give an example (and this example is taking advantage of the no expiration feature the OP bought). You could go to theme parks for 7 straight days, and then go to one water park for 7 straight days AFTER that. OR you could do a theme park AND one or more WPF&M admissions on a given day. It's all up to you.
Think of the WPF&M admissions as if you had 7 paper tickets. Each time you enter a WPF&M gate, you have to give one of those tickets. If you go to Blizzard Beach in the morning, Typhoon Lagoon in the afternoon, Disney Quest in the evening and the clubs at Pleasure Island late that night, you'll have used up 4 of your 7 WPF&M admissions in a single day. I'm just including this for illustration purposes.
Please ask more questions if you have any.