The physical evidence seems pretty compelling that Mars once had torrents of water over much of its surface. Not only does it have features that look like they must have been river valleys, but there’s new evidence of sedimentary geological (Areological? Help me) structures.
It also looks pretty likely that the polar caps are made of ice, but they look pretty small compared to the amount of water that must have been there. If the stuff just evaporated, it would still be in the atmosphere, but there isn’t much of THAT either. The surface is largely red, so maybe much of it went to forming oxides.
So, what happened to all the water? Do the amounts add up?
Aside from the ice caps (which, BTW, are mostly frozen carbon dioxide…dry ice), the next best location would be underground (frozen aquifers). This is still to be confirmed though.
Much of it is in the northern ice cap, which is much larger than it appears; besides the visible white part, there’s a larger mass of ice which is under the top layer of regolith surrounding the white part.
A very large portion of the “missing water” is bound up in permafrost all over the planet. The best evidence for this is the “splosh” craters seen in many places. These are impact craters like any other, except the ejecta surrounding the crater is rounded and resembles paint or mud spatters. This suggests that the impactor hit permafrost, and then the heat of the impact turned it into mud which “sploshed” onto the ground around it.
But to be perfectly frank, we currently just don’t know exactly what happened to Mars’s water. That’s one of the reasons we need to go there.
