The water tool is located in the "CIV" folder. (Exactly where the border buildings are located)

I don't know if it's my PC, but my screen freezes every now and then when I use the water tool. It happens when placing the water. Mostly when trying to create a large expanse of water. It can have bad consequences.
If the screen freezes, don't release the left mouse button until it returns to normal.
Because of this save the map more times, when using the water tool.

First of all, you should turn down your graphics settings.

Pause the game with the spacebar.
(You can see that on the default rivers, whether you're in pause mode or not.)

In the beginning, all you need for a lake is a level surface.
For the small river that can be seen in the picture, you need several levels.
Once you've found a good spot, you can start shaping the terrain.

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When you have done that you can start to create the first water surfaces with the water tool.

You can only draw square shapes with it. That's why it can often take time to create a lake or a river on the mountain
The water surfaces can be removed with the Buldozer.

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Placing water on a slope is a bit more difficult. I found a new way to simplify placing waterfalls and water in general. I'll show you that in a couple of pictures


Try it yourself

I noticed that if I place the water like in the first picture, I can only place thin strips of water, but if you turn 45 degrees like in the next pictures and try the same thing again, you can easily place much larger areas.

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How to create a waterfall

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Try to place the water all the way to the cliff. I always start at one of the top corners of the waterfall. Where the pencil is pointing is where you should start. Always try to get as close to the cliff as possible. From there, hold down the left mouse button and drag into the desired shape.
Tip: hold down the Alt key while placing, this allows you to rotate the water.

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Depending on how steep you place the waterfall. It can happen that steps can be seen in the
water. This usually happens when you place the water too steeply

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Now it is important to give the water surfaces different heights.
I always start with deepening, then with increasing all around.

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Smooth the terrain to make the sharp edges disappear and add a few plants, that's it.