Rinse the cranberries under cold water and remove any stems or bad berries.
In a medium saucepan, combine water and sugar, and bring to a boil over medium heat.
Add the cranberries to the saucepan and return to a boil.
Reduce heat to a simmer and cook for about 10 minutes, stirring occasionally.
Watch as the cranberries burst and the mixture thickens.
If desired, add vanilla extract, cinnamon, and orange zest during the last minute of cooking.
Remove from heat and let the sauce cool to room temperature.
Transfer the sauce to a bowl and refrigerate until ready to serve.
For a smoother texture, blend the sauce in a food processor.
Serve chilled or at room temperature.