There are two types of hydramnios: oligohydramnios, which means there's not enough amniotic fluid around baby, and polyhydramnios, which means there's too much.
If there's not enough fluid, it could mean several things. It could mean your water has broken and some of the fluid has leaked out. Or it could be that baby's not peeing enough (yup, amniotic fluid is made of baby's pee), which could be a sign baby's not getting enough blood and nutrients from the placenta. The problem with not having enough fluid is that there may not be enough cushion for the umbilical cord, so it could compress, and baby might not get adequate blood flow from it. How oligohydramnios is treated will depend on what's causing it. If you're close to your due date and your doctor is concerned about baby's well-being, she may choose to deliver.
In the case of too much fluid, there's no treatment necessary, but your doctor will watch you closely since the excess fluid could make your uterus contract and cause preterm labor.