What do you think moonshiners burned? Corn liquor, moonshine, alcohol, etc. Ethanol is moonshine with an additive so you won't drink it.
What do you CLEAN carburetors with? Alcohol
What does gas do that ethanol doesn't? Leave residue in the form of varnish.
What does varnish do to a carb, plugs it and makes it stop working. Hence the reason you add Sta-bil and other treatments.
Running 10% ethanol keeps your carburetor clean, in fact it keeps your fuel system clean.
As for water in ethanol. Your really concerned about 10% of water vapor in 10% of your fuel? Perspective- Your sucking in more water vapor running the motor in the rain or on a humid day. Optimum air to fuel mix ratio is 14.7 to 1. That is 14 parts air to 1 part fuel.
Another fun fact- ethanol is used as a racing fuel. There are a whole bunch of other alcohols used as racing fuels, depends on the classification of racing your doing. The ethanol added to your gasoline increases the octane rating of your fuel. Think of it this way, they have to water down the ethanol with gasoline so your don't fry your non-racing engine.