The water world is modeled on the world of Chelestra, the third world in the Death Gate Cycle. In that world, the entire world was a globe of water (no rock core at all, unlike this world) with floating seasuns and seamoons to provide light and heat and a solid place for people to live. A pocket of air surrounded the seamoons, but the water itself of that world was also breathable. The protagonist of that series, when he got dumped into that world, experienced a moment of OMGWTFBBQ similar to Syaoran's. XD
The Missing Worlds - Water World I
Rating: PG-13
Spoilers: This story is set in the uncertain period after Piffle World, but before Recourt; in other words, in the same never-neverland that the second season of the anime mostly took place in. This means that Fai has not yet learned to whistle, Syaoran is still the original Syaoran, and nobody knows anything about Kurogane's childhood.
Summary: Everyone gets very wet, and Syaoran makes a new friend.
( You want ground that floats in the sky? I don't think we have anything like that! )
~to be continued...