What is the ruling on distributing food and water to neighbors on the day of the Prophet's birthday, peace and blessings be upon him, and what should be done on this day?

The ruling on celebrating the Mawlid (Prophet's birthday) has already been answered. It is not prescribed for a Muslim to perform any specific act on the day of the Prophet's birthday, peace and blessings be upon him, due to the lack of any religious evidence for it. Allah, the Almighty, says: "Or have they partners who ordained for them in religion that which Allah has not permitted?" Those who celebrate fall into a contradiction; while they celebrate his birth in Rabi' al-Awwal, they ignore his passing in the same month. If there were any good in it, the Companions would have preceded us to it. Ibn al-Hajj said: "It is most astonishing how they celebrate the Mawlid with songs, joy, and happiness… while in it, the Prophet, peace and blessings be upon him, transitioned to the honor of his Lord, the Almighty and Exalted, and the Ummah was grieved and afflicted with a great calamity."