I spent some time researching this question at my local records office in Taunton. I located a book written by D Horne which suggestes that perhaps we need to explore why they are Holy. He proposes that it was the first missionaries who gave the...
" sacrement of baptism, so it was by these waters that the recipient came out of the blindness of heathenism into the light of faith."
 It was as if the water gave us spiritual sight.Dom. Ethelbert Horne 1923 Somerset Holy Wells, a monograph
 I'm intrigued by this idea but also after meeting a local herbalist I started to think about the plants that grow around Holy Wells and perhaps the flow of water through their roots and leaves may mean the water becomes potentised by their medicinal properties. For example around St Agnes Well you have large quantities of horestail growing. 
 The Ancient Greeks used horsetail in the treatment of wounds and the Romans used it as a vegetable, an animal feed and a medicine. Culpeper said it was 'very powerful to stop bleeding, either inward or outward, and eases the swelling, heat, and inflammation of the fundamental, or privy parts, in men and women.' The Chinese use E.hiemale, or mu zei, to cool fevers and as a remedy for eye inflammations such as conjunctivitis and corneal disorders, dysentery, flu, swellings and haemorrhoids. Recent research in Russia has apparently demonstrated that horsetail is effective in removing lead accumulations in the body. The dried stems may be used as a metal polish, hence the common name pewterwort. I think the next step would be to test the water and see what it contains watch this space.