This rare kanji has no clear standalone meaning. Treat its meaning as uncertain.
The exact historical development of 澃 is uncertain. It visually combines 須 on top and 水 on the bottom, but the original semantic and phonetic roles of these components are unclear.
With 須 (need) over 水 (water), picture needing water so badly that you see it everywhere, but the kanji itself remains mysterious.
For キョウ, imagine a person named Kyo desperately needing water: Kyo -> キョウ, and the kanji shows 須 (need) over 水 (water).