Recently we have implemented a smooth Gaussian-based dielectric function in DelPhi (J. Chem. Theory Comput. 2013, 9, 4, 2126-2136) that models the solute as an object with inhomogeneous dielectric permittivity and provides a smooth transition of dielectric permittivity from surface bound water to bulk solvent. While intuitively it is well understood that protein hydrophobic core is less polarizable than the hydrophilic protein surface, less attention is paid on the polarizability of water molecules inside and on the surface of the solute. Here we apply explicit water simulations to study the behavior of water molecules buried inside a protein and waters at the surface of the same protein, and contrast it with the behavior of the bulk water. We selected a protein that is experimentally shown to have five cavities, most of which are occupied by water molecules. We demonstrate through molecular dynamics (MD) simulations that the behavior of water in the cavity is drastically different from that in the bulk. These observations were made by comparing their mean residence times, dipole orientation relaxation times and average dipole moment fluctuations. We also show that the bulk region has a non-uniform distribution of these tempo-spatial properties. From the point of view of continuum electrostatics, we argue that dielectric "constant" in water filled cavities in proteins and space close to molecular surface should differ from that assigned to the bulk water. This provides support for Gaussian-based smooth dielectric model for solving electrostatics in the Poisson-Boltzmann Equation (PBE) framework. Furthermore, we demonstrate that using a single energy minimized structure Gaussian-based model is capable of reproducing averaged over MD trajectories polar solvation energy. Thus, we argue that Gaussian-based smooth dielectric function not only captures correct physics but also provides efficient way of computing ensemble averaged quantities.