I think it refers to the controller that is not waterproof. They are just circuit boards with a little shrink wrap on them. They are open on the sides and water can easily get in and short the circuit boards. I think I had heard that some of the 3racing or RC4WD winches use a brushless motor. They tend to not be as friendly with water then a brushed. But if it is a brushed motor winch, then just seal the controller and you will be fine. On one of my rigs I have a 3Racing 1/10 winch. I run it with a "Heyok" controller. Heyoks controllers are waterproof and work much better then the stock ones anyway. More power, less wiring and waterproof. On my rig with the 3Racing I have had no issues with water or mud and it has been submerged countless times.
If it is a winch with a brushless controller then I am not of any help. I have not used one so I can not say what would be needed. for the controller, I would just place it in a sealed box or silicone it. I would never run one of them again though as they really are poorly made and have many issues. Wires falling off is one of the common things. Poor soldering, etc.
I think a better route would be to look into one of Heyoks servo winch setups. It will be hidden in the vehicle and not look like a winch. But the performance of a servo winch compared to the 3Racing type is far superior. If you are doing it for looks, then it doesn't really matter waterproof or not. But if you want to actually use the winch, the servo types will really be a much better option.