Is this to seal the walls of the cistern so water doesn't leak out?

If so, I would check out swimming pools, they do this all the time.

yes, this is to seal the walls, but you normally do not drink the water out of of a swimming pool.

you should do some research on how they waterproof cisterns in earthships. I believe they use plaster and a acylic coating

here is a link to the texas guide to rainwater harvesting. It might have some helpful info

Here is a link that might be useful: texas manual on rainwater harvesting

Seems like you can use thoroseal to waterproof a cistern.

14 - Can I use ThoroSeal ® or Super ThoroSeal ® to seal my pond or cistern?
Yes! Apply the coating, then wait 5 days to allow time for a complete cure. Scrub the pond or cistern with salt water a couple of times, and rinse thoroughly before filling with water.

Here is a link that might be useful: faq's from thoroseal

it's rated for potable water by the National Sanitation foundation

Here is a link that might be useful: thoroseal

"but you normally do not drink the water out of of a swimming pool."

I read part of the Texas Manual and it lists a concrete basin with a plastic liner as one of the larger water storage tanks. Looks like a swimming pool to me, if you don't over chlorinate it or pee in it it should be safe to drink.