I am preparing a drywall wall for a tile backslash in a kitchen. There is a hole that needs to be fixed behind the faucet. Is it better to use spackle or thin set, since it would be in a place where there could potentially be a risk of water getting behind the tile at some point.
Drywall compound is the correct material to patch drywall with. I'm curious why you aren't tiling to a fiber cement product, and suggest using a waterproofing membrane like Hydroban if you are really worried about water infiltration - https://www.google.com/search?q=hydro+ban&source=univ&tbm=shop&tbo=u&sa=X&ved=0ahUKEwiLspa0_7HZAhVnp1kKHbQ9DyYQsxgIKw&biw=1760&bih=839 is very easy to work with.