A molecular dynamics simulation study of hydrated Nafion at water contents ranging from 5 to 20 wt % was performed to examine the structure and dynamics of the hydrated polyelectrolyte system. The simulations show that the system forms segregated hydrophobic regions consisting primarily of the polymer backbone and hydrophilic regions with an inhomogeneous water distribution. We find that the water clustering strongly depends on the water content. At low water content, only isolated small water clusters are formed. As the water content increases, it becomes increasingly possible that a predominant majority of water molecules form a single cluster, suggesting that the hydrophilic regions become connected. We characterize the atomic structures formed within the system by various atomic pair correlation functions. The water structure factor shows a peak at q values corresponding to an intercluster distance about 2.5 nm and greater. With increasing water content, the distance moves to larger values, consistent with findings from scattering experiments. We find that the degree of solvation of hydronium ions by water molecules is a strong function of water content. At 5 wt %, a majority of the hydronium ions are hydrated by no more than two water molecules, prohibiting structural diffusion. As water content increases, the hydronium ions continue to become increasingly hydrated, resulting in structures capable of forming eigen ions, a necessary step in structural diffusion. Addressing the experimentally observed fact that conductivity in these membranes abruptly drops near 5 wt %, we find that both the local structure of the poorly hydrated hydronium ions and the disconnected nature of the global morphology of the water nanonetwork at low water content should contribute to poor conductivity.