Don't worry about digitized line direction for your water distribution data because flow is derived from your water/pressure sources and these systems are so looped that almost all your flow is indeterminate (so digitized direction is meaningless). For terminal assignments, you just need to make sure you don't have more than one line assigned to the same terminal, and that your upstream terminal always point towards your pressure/water source. If terminals are not properly set you will not get topology errors, you will get subnetwork errors (because pressure zones are interconnected when they aren't designed to be).
Sewer/stormwater is a completely different situation. Because these systems are not heavily looped and rely on gravity, customers have historically relied on the digitized direction of lines to manage flow. We will allow you to drive analysis using sources and sinks, but in 3.3 we also introduced an option to trace upstream/downstream using digitized line direction.
By default, the utility network doesn't rely on the digitized direction for upstream/downstream analysis, instead it uses sources and sinks. You can deep dive into water modeling on the Learn ArcGIS Utility Network for Water Utilities learning path.
