Witches are characters in the Shrek universe. They have brooms used to fly and have pointy hats. They are recognized by their evil cackle. Their appearance and weakness to water is based on the Wicked Witch of the West.
Mostly they are old ladies that are green with pointy noses. A lot of the witches are evil and melt if they touch water. The witches appeared in Shrek 2 as customers at the Poison Apple.
The witches work for Rumpelstiltskin, but since this is in an alternate universe the witches are bad, but in Shrek's universe they are good.