So I removed the sun pads from the engine on my 29' Fever to make a repair and now I have to reinstall them. Does anyone know what prevents water from going through the predrilled holes in the hatch where threaded bolts on the underside of the pads go through? It seemed like there was some type of wax/grease substance around the openings on the engine hatch or the t-nuts attached to the pads but I don't know what the substance would be. I'm not using silicone..

There is no sealant. The wax stuff is used on all the fasteners thru out. Not sure if it's to prevent the nuts from seizing on the studs or some type if anti corrosion. Or just some type of tacky assembly aid to hold all the fasteners in place during assembly.

The same wax is sold at lumber yards used for building decks with stainless screws. Its sold in a tube that's looks like it would fit a grease gun, Very thick and high heat wax

But is it used as a sealant or just to hold washers in place?

When I redid my old 27 hatch, I did not add any sealer/antisieze back to the studs. I don't recall ever noticing a leak on the underside of the hatch, but we also try to dry off on the swim platform before getting on the vinyl.

"Solidoil" in Australia or "Lubestick". It's not a sealant, it's a lubricant. Bit like Vaseline but it lasts much longer and it's non-greasy. Great on press snaps for your covers. It will prevent corrosion if you put enough on to completely shield the metal object from the elements.
It can be used as a harmless glue just to hold a washer in place or similar when assembling something in a hard to get to place.

RR