Living in a desert nation...
Living in a desert nation, it would have been no news to Moses that you could get water from striking a rock. Porous rocks like limestone can trap small amounts of water locked in by mineral deposits. Striking a rock can break away these deposits that stop up the water and cause water to stream forth. The miracle is that it was a sufficient flow of water for a party we're told numbers over a million! God's sign to the Israelites was something like Jesus' sign to Simon Peter when he had Peter cast out his nets and bring in a catch so large the nets began to break.