These are the watercolor pencils from Castle Art Supplies. The cores dissolve in water. Touch a wet brush to a colored area and the pigment spreads out, giving a look like watercolor paint.
There are 72-color and 120-color sets, each in a tin or a zip case. There are also themed 24-color sets and a 60-color set of woodless pencils.
Used dry, they work like regular colored pencils for small details. Add water and the lines dissolve and the colors blend. Dip the tip in water before coloring to get a deeper color.