delete the 'it' in these sentences. Is drinking iced water bad for you? If you want to leave out 'iced water' because it is quite clear to the listener what you are talking about, then you can substitute 'it' - is drinking it bad for you? But you don't need both, as they are both describing the same thing. Is bigger always better? You can't really leave out the bigger and substitute 'it' in this example, as it is substituting for an adjective rather than a noun. And you certainly don't say 'is it bigger always better'. An example of is+it+verb, might be - is it working? Here again we have substituted 'it' for a noun. Is (it) the computer, working? So in these examples, think if 'it' as being a substitute for the noun, and if you wouldn't put the noun in a particular position, then don't put the it there either. I hope that is helpful.

For your sentence: "Is drinking ice water bad for you?" -> drinking here becomes a gerund [hence a noun] so the verb drinking here is your subject "Is it drinking ice water bad for you?" -> no need to add "it" you can either say "Is drinking ice water bad for you?" or "Is it bad for you?" - it referring to" drinking ice water"