The expression jerkwater town is often applied to a small rural town with very few amenities or accommodations for visitors. Such a town may be so isolated or insular that the population shrinks every year as younger residents move to larger cities. A typical jerkwater town may feature a single service station, a locally owned diner, a few small shops and a church. The expression is often used in a derogatory sense to define a small town in a perpetual economic downturn, hampered by location or accessibility. Typical dialogue in 1930s gangster films would include the main character's anxiousness to "get out of this jerkwater town" or "blow this Popsicle stand."

There is one theory which suggests the term jerkwater town is derived from the small town tradition of operating a soda fountain inside the local drugstore. An employee known as a soda jerk would prepare ice cream desserts and flavored sodas for drugstore customers. These sodas would consist of sweet syrups and soda water drawn or "jerked" from a gas-charged dispenser. Because these soda jerks became so closely associated with small town life, it is conceivable that a disgruntled imbiber might describe the alcohol-free environment as a one-horse or jerkwater town. When the only beverages available are the ones produced by a soda jerk, the association with a stifling small town existence might become popular over time.

A far more likely source for the expression can be traced to the railroad industry of the 1870s and 1880s. The main railroad lines tended to pass through larger cities, where passengers and crew alike could find overnight accommodations, food and other necessities. The steam-powered trains themselves could be replenished through large water towers located near the railroad stations. This was not the case for less-popular lines which branched off from the main tracks and serviced smaller towns, however.

The branch lines often went through smaller towns which lacked the technical capabilities of mainline railroad stations. There were no large water towers to replenish the steam engines, for example, so water would have to be transported to the waiting crews. The act of drawing water is also known as "jerking", so the imported water supply would be called "jerkwater". Railroad workers and experienced passengers would know if a particular destination was on a main line or on a branch or "jerkwater" line. Stopping in a jerkwater town, therefore, would mean a longer turnaround time and a limited number of amenities during the hiatus. Over time, improvements in the railroad industry eliminated the need for water stops in so-called jerkwater towns, but the expression is still used informally to describe an exceptionally small town with limited attractions and amenities.