It's most likely the ET was building some sort of magnetic machine and using the water tower as a it's magnetic field's center (notice when all metalic objects are attracted to the tower), so he could gather all of those weird little cubes at once and rebuild his ship (I believe it's their function).
About the scene where ET grabs Joe, since he can have telepathetic conversations/read minds, I believe he saw Joe's pain about losing his mother and he still moved on, so that's the point, "bad things happen (you crashed here, stupid humand did horrible things to you), but you can still live.