Water damage to screen?

I haven’t seen your exact problem but I can explain what it is. Looking at this picture we can see the basics on how an LCD screen works:

Starting from the right 6 is the backlight source and 5 is a polarizer filter collimating the light in one direction, then the light passes through the rear glass plate 4 that sandwiches the liquid crystal medium 3 with the metal oxide electrodes and the thin film switching transistors 2 and then the front cover glass and the front polarizer 1.

Here the rear polarizer 5 sheet has curled along the edge from what ever got in so its not laying flat. When you heat up the panel the curl is removed. The upper part of the screen is caused by liquid damage on the panel its self causing signal leakage between the lines.

Sadly, this display is not repairable as its sealed. You’ll need to replace the full display assembly which is around $600. Here’s the needed guide to replace it MacBook Pro 13インチ Touch Bar Late 2016のディスプレイアセンブリーの交換