THOSE who have only eaten water chestnuts out of a can generally recoil in disbelief at first encounter with a fresh one. In this pleasant case, expectations fall far short of reality. Fresh water chestnuts are remarkably, refreshingly, endearingly sweet, vaguely reminiscent of fresh, tender sweet corn. Tasting is believing. Water chestnuts, or ma tai as they are known in Cantonese, are an ancient Chinese crop, believed to have been cultivated now for some 3,000 years. People here enjoy them as much as their ancestors, so water chestnuts are common and virtually perennial in markets in Hong Kong as well as in China. Three characteristics may surprise the Western consumer. First, canning virtually destroys their flavour. Second, cooking improves their texture. When eaten raw, tasteless fibre remains in the mouth after the sweetness disperses; cooking renders the whole nut uniformly edible. Finally, the Cantonese think of this first as a medicinal tonic, only secondarily as a vegetable. Chinese doctors describe water chestnuts as having ''cold'' energy and sweet flavour - an unusually palatable cure for over-heated conditions (typically caused by eating too many ''heating snacks'' such as potato chips, candy bars, and mooncakes). The best are large, round, bright and as firm as a crisp apple. Take care in selection. The nuts are best stored in a plastic box, with a bit of air circulation around them. Sound nuts will remain fresh almost a month in this way. The flesh should be pure white; if it is not - yellow is the typical colour of decay - trim generously or discard completely. Toss peeled nuts into water while you work to prevent discolouration. You may store peeled water chestnuts. Some flavour will be lost to the water, but it is a small price for the convenience of having peeled nuts at your fingertips. Water chestnuts are popular in home cooking, in restaurant cuisine, and in the street-side hawkers' repertoire of snacks. This is one of the few vegetables that Hong Kong Cantonese eat fresh and raw, like fruit. For snacking, street vendors sell skewersof four to five peeled, whole water chestnuts from large jars of sugared water. Even so, cooked water chestnuts are by far more common, and they appear in sweet and savoury dishes alike. On the sweet side, they are used in both hot soups and cold puddings (ie. ma tai go). On the savoury side they figure in tonic soups, (with esoteric parts of pigs), braised casseroles (particularly with lamb and leeks), stir-fried mixtures (particularlywith broccoli and/or seafood), and minced concoctions for steaming (as with minced pork and the mooi choy preserved cabbage), for pan-frying, or for stuffing dumplings and wonton. Vegetarian restaurants in particular use them though, but often the canned variety. On the other side of the gastronomic divide, Western recipes use water chestnuts in salads of fruit, greens or other vegetables (preferably parboiled) and in hors d'oeuvres. As in Chinese cuisine, water chestnuts go particularly well with seafood, offering complementary sweetness and crunch to the natural richness of prawns, crab and oysters.