Follow the Waterway and Find the Skeleton Key are quests in Chapter 10, "Rough Waters", in Final Fantasy VII Remake, taking place in the Sewer System. After Cloud Strife, Aerith Gainsborough, and Tifa Lockhart fall in the sewers and defeat Abzu, it breaks open part of the wall. Tifa points out that the waterway path can lead back to Sector 7, and the two follow her lead.
After fighting Abzu, heal HP for an imminent fight, though a bench will be available shortly after before more challenging fights. Run back down the waterway, opposite to where Tifa and Aerith are standing, for a treasure chest with an ether, and then run towards them and a sahagin will appear. The sahagin are weak to Fire, though most enemies in this area are weak to Ice, meaning Ice Materia can be used. These enemies can be pressured using fire spells or with Tifa's Unbridled Strength martial techniques. After this, head up the ladder and follow the path right, grabbing two hi-potions from the treasure chest on the end.
Continue following Tifa and Aerith, and they will stand by a canal sluice switch. Pull the lever to open a floodgate, then descend the stairs and move underneath the gate to obtain a weapon for Tifa, the Feathered Gloves; this weapon has an upgrade path that can greatly increase her Speed and Attack Power attributes, but deny her the ability to pair Elemental Materia. After this, follow Tifa and Aerith through to a room with a bench to heal HP/MP and a vending machine that sells previously available items as well as the track "The Oppressed". Head to the right and down a ladder to proceed.
After dropping down the ladder, the path ahead is left to an open room and left again. Several wererats appear, but can be defeated in a few normal attacks. Continue straight through several rooms until the path leads right to another, where wererats and a scissorclaw are fought. The scissorclaw is durable against physical attacks, meaning it is best defeated with magic spells, preferably from the Ice Materia to exploit its weakness; powerful physical attacks such as Cloud's character abilities and Tifa's Unbridled Strength techniques are nonetheless viable. Proceeding right and down the path will lead to a locked gate; instead, proceed straight through a hidden down (in the northwest-most room) and take the ladder up to proceed.
The path leads to a small room with a fork, leading around right or left. Both paths are practically identical, and will lead through a dark-lit corridor to another room on the other side. In this room, before proceeding north along the path, head back south and use the door to reach a small power room. Pull the lever to activate a power generator. Head north and interact with a door, which is locked; Tifa will recommend the party find Jessie's skeleton key. Head south down the right or left path, which are now lit up. On the left path, the water can be drained using a sluice lever in the bottom-left end, allowing the lower canal to be explored, where a treasure chest contains 800 gil. On the right path, scissorclaws are fought, using the same tactics as before, and draining the water using a lever on the top-left will reveal the key, found underneath the bridge on the south end below graffiti of Stamp. This allows the party to open the door in the north.
After opening the door, approach Tifa for some dialogue, leading to the next quest, "Crossing the Trunk Line".
Hard mode tips
Conserving MP is particularly important, especially after the Abzu fight. It is best to rely on Prayer Materia and Chakra Materia for healing if necessary at all, and equipping weapons with the Bloodsucker rather than relying on spells to heal. Break as many boxes as possible to gain MP from mako shards, and as Aerith, use Soul Drain offensively to gain MP while dealing damage.