Energy can be transferred from object to object. For example, when the heat is conducted in a metal handle, the energy is transferred between neighbor molecules.
Energy can be also transformed from one form to another. There are many forms of energy, including the kinetic and the potential ones, chemical, nuclear, and electric. At the Great Falls, each drop of water has potential energy at the top of the falls and kinetic one when it hits the water at the bottom of the falls. The source of the energy is not in the water itself; rather, it is the gravitational field that pulls all objects toward the center of the Earth.
That creates a source of free energy available to all who care to use it. The City of Paterson was created around the Great Falls to harvest that energy. Stream of water was directed around the city in the so-called Water Race. Along with the water race, multiple water mills were built. The motion was transferred to multiple manufacturies via sets of rotating wheels and gears.