Outside the city of Megaton there is a beggar that is constantly there asking for some Purified Water.

If you give it to him at no charge he will accept and you will gain a Karma boost (positive). You can do this infinitely.

A good place for purified water is your house, your robot butler in Megaton can purify a number of waters for you before needing to recharge.

Another way to raise karma is to donate at the Church of Atom. For just 10 caps you get a decent boost of Karma.

Once you have gained enough good Karma random settlers in Megaton will come up to you and give gifts, such as healing items and ammo.

High karma also lets the more benevolent party members to join you throughout the game.