Learn Russian: Мы заказали воду вместо алкоголя.

The preposition вместо (instead of) always requires the noun that follows it to be in the Genitive case. Because the dictionary form алкоголь is a masculine noun ending in a soft sign (-ь), it takes the -я ending in the Genitive, becoming алкоголя.

Why is воду in the Accusative case, but алкоголя is in the Genitive case? Aren't they both things being ordered?

Воду is the direct object of the verb заказали—it's the item you actually ordered—so it takes the Accusative case. However, алкоголя is grammatically tied to the preposition вместо, which overrules the verb and forces the noun into the Genitive case.

We used заказали. Could we use the imperfective заказывали here instead?

Заказали (perfective) is used because it refers to a single, completed action in the past with a definite result (the order was placed). You would only use the imperfective заказывали if you were talking about a repeated habit (e.g., "We usually ordered water...") or emphasizing the prolonged process of ordering.

Is вместо related to the word место (place)?

Yes! Historically, it comes from combining в (in) and место (place), so it literally means "in place of." Just remember that in modern Russian, it is always written as a single word: вместо.