this is not water damage, this is water cleaning the crap off the fence. give it time and it will match back up. if you had it stained, then you will have to stain the bottom to match, and most likely it never will as the top will always be a different color. this is why around here no one stains their wood fence, they just let the elements weather it.

Out here the "bleaching " effect that resembles your situation is due to high calcium/ alkaline deposits in our water. If that's the case in your situation, you can mix up a 50-50 bleach/water solution and spray the upper half to match up with the bottom, let dry, stain and seal.

OK, that's good to know. Yeah, i'm in Southern California.

How often do I need to re-seal? Once every few years?

Cabots recommends every five years, but I think it is dependent on location. In SoCal, I would think the concern would be geared more towards the dryness and heat, so something with u.v. inhibitors might work best. I would say it's safe to stick with mfgr's recommendations concerning how often, I usually end up applying repeat coats a little sooner than what they say.