Closed This water's floating.

This looks like a map generation error. It might be a good idea for world generation to force-flow water for a bit? Or maybe erase any water that's without a "bottom" to its cave, if there's an issue with the water flooding things that shouldn't be flooded (as an example, this would've flooded the area where a frog merchant guy was hanging out, if it had flowed down on its own).

The water DID flow properly as soon as I changed a single block in the cavern - it's no longer there, but in the frog merchant's room below and to one side

 

This looks like a procedurally structure (you're standing on) was generated and has erased some foreground blocks to make room for itself. But like with "floating" sand and gravel, has not caused a "block update" or terrain update which would sand, gravel, and water to react and to fall.

 

That's what I assume caused it, yeah - I'm standing on one of those procedural "temple brick" things, with a frog merchant at one end and a bunch o' nothing at the other. I was just wanting to make it known that this kind of thing happens, and maybe suggest a way to get rid of it.

I like the floating sand/gravel, though, I enjoy being able to cause cave-ins. I figure that all can just represent loose or unstable terrain that your mining or messing with can cause to crumble