How does Sodium acetate react with water?

Removes a 'proton' from the water molecule. You might think of it like, CH₃COO^-is the anion of a weak acid and Na⁺ is the cation of a strong base. Sodium acetate dissolved in water would if conc. is high enough, make the solution alkaline.

Congratulations, you just discovered process of hydrolysis

Yes, that's what is happening:

CH₃COO^- + H₂O ↔ CH₃COOH + OH^-

You might want to read on Brønsted–Lowry acid–base theory, this reaction is an important part of it.

symbolipoint said:

Sodium acetate dissolved in water would if conc. is high enough, make the solution alkaline.

0.01M solution of sodium acetate has a calculated pH of 8.4, you don't need high concentrations for the effect to be easily observable.

Borek said:

0.01M solution of sodium acetate has a calculated pH of 8.4, you don't need high concentrations for the effect to be easily observable.

Some fading of precise knowledge has been happening the last several years. (That is, in my knowledge)