Combine the water, sugar, and vinegar in a saucepan. Cook over medium heat, stirring occasionally, until the sugar is dissolved and the liquid becomes slightly thicker.
Let the sauce cool and then stir in the dried red chili flakes. Right before you’re ready to serve, top the sauce with the coarsely chopped roasted peanuts and cilantro leaves.
To Make Fried Tofu:
Place the block of tofu between two paper towels and press down gently to remove excess water. Cut the block of firm tofu into 8 large cubes by making three cuts horizontally and one cut down the center of the tofu block, vertically. Then cut each cube in half to make 16 equally-sized triangular tofu wedges.
Add a mild-flavored oil to a pot so that it's at least 1 inch in depth. Heat the pan over high heat until the oil reaches 375-400 degrees Fahrenheit.
Carefully lower the tofu wedges into the hot oil and allow them to fry for several minutes, turning the pieces occasionally with long tongs. The tofu is ready when it is golden brown on all sides. Place the fried tofu on paper towels to soak up excess oil. Sprinkle with salt while it's still warm.
Serve the fried tofu with the freshly prepared sweet and sour peanut dipping sauce for a spicy and sour accompaniment, or with Nam Jim Satay for a creamier taste.