Water Mario is a power-up achievable by eating a Water Flower.
The abilities used is to throw water balloons to slow down enemies and damage enemies. The damage given is half the amount as if to throw a fire ball. Mario can also breath underwater for as long as he wants.
It is a Power-Up form in the game. He can only turn into this when Mario doesn't have F.L.U.D.D.Piranha Plants if they swallow them, and it is the only way to defeat Petey Piranha, a secret boss. Some enemies, however, get powered up by the water, such as Pokey Piranhas and Watorbs. Mario can also preform a Water Dash, where Mario can dash in midair in any direction, which can help Mario reach new heights.
Yoshi is affected as well, when he spits out enemies, they come out as bubbles.