The excerpt implies that Tenochtitlan has water canals throughout the city.
The soldier describes that there are "broad streets" that are traveled by canoes. Canoes are only used in water, and the fact that he describes broad streets means he is referring to a city. Finally, the soldier describes that canoes are people's transportation in the city, since without them "they could neither leaver their houses nor return to them."
Tenochtitlan was located in Mexico. It was an efficient way in which indigenous people (Aztecs) would raise their crops in chinampas (little islands).
