Water is transparent so water surface should be visible even when one looks at water surface through block water, but it isn't. For example player should see surface of lake when he looks at it from behind of waterfall.
Actually it is a bug but I don't think it is fixeable without making under water viewing jacked up. Water surfaces aren't renderable when you are looking through water, this stops you from seeing the corners of every individual block when you are underwater but it also kind of loses the realism when you are above water :\
We just have to deal with it until notch finds a work around.
We just have to deal with it until notch finds a work around.