Ahh yeah, i know what is it. This is a WorldEdit feature that makes the program ignore the normal water height limits and merge the water when they are on a different height.
As i was always curious how blizzard did those nice waterfalls in their maps (see the Orc tutorial mission in RoC), one day i opened an official map with (this Orc tut. mission one), and what i found was exactly this thing. I started to search where i can do this (cuz if you attempt to do the water like this, WE will be nice and separate the two waters, raising a huge ciff betwen them .
Finally i found it, and i currently use it in one of my maps. it can be found at the advanced menu, the enforce water heights must be disabled.
thank god somebody said it, this is the kind of thing that happens when you dont have a terrain forum
blizz used this meathod a lot, for makeing variouse levals of waterfalls. but generaly, its looks pretty crappy. the same effect can be achived to a much higher quality, by useing multiple waterfalls, and the moonwells ability model