In a large skillet, combine onion, balsamic vinegar, and water. Simmer over medium-low heat for 10 minutes. Place bratwurst in the simmering water; cover, and simmer 20 minutes. Be sure the water is only simmering, not boiling.
Preheat an outdoor grill for high heat, and lightly oil grate.
Remove the bratwurst, and drain liquid from pan. Add butter to the pan with the onions, and cook over low heat until onions are browned.
Grill brats over high heat for 5 to 7 minutes, turning to brown on all sides. Serve with onions.
