This is an idea for a Water themed dimension. There are a couple other descriptions for water dimensions out there, but mine might be wildly different.
Like other dimensions it would be surrounded by void. The main "matter" of this dimension is tubular in shape. Perhaps a width of only 400 blocks? The tube is completely waterlogged and it is made up of bubble streams that go up and down. In between these streams are structures made of coral/unique-blocks that layer over each other like floors of a never-ending building.
I say never ending because the generation of this dimension is infinite vertically. You can get caught in a bubble column going up, and the game just continues to generate sub-chunks vertically. Going down would create sub-chunks in the opposite direction. It would always be waterlogged and there would always be tubes of coral structures to land on if you're wanting to get out of the bubble columns.
Going OUTSIDE the water causes you fall SIDEWAYS, which would push you pass a limit and kill you, (similar to the End). After death you'd return to bed/spawn. This would make battles difficult in the dimension, as simply being pushed out of the water changes your direction of gravity. Better have ender-pearls!
There is a main Portal in the dimension, similar to the End, that takes you back to the Overworld. Several outpost portals along the tube will take you back to the main portal.
Alternatively you could have a mechanic similar to the Nether where portals between the dimensions are dependent on the XYZ. However, this would create a unique algorithm. The Overworld and Nether are horizontal dimensions. Since this water dimension is vertical, you'd have to switch axes. So being 4000 Y in the water dimension would equate to some number on the X or Z axes in the Overworld. How'd this work could be complicated, but if successful it would be a very fun mechanic.
Mobs: Water mobs that aren't affected by the bubble streams. Fish perhaps could spawn here, but unique mobs would likely live here. Mermaids perhaps. Large electric eels. A boss mob could exist such as a water dragon or kraken. Perhaps this is the home of Guardians.
Structures: The main structure that repeats every sub chunk with variation would be the tubes of coral/prismarine/something that reside next to the bubble columns. Perhaps every once in a while a sub-chunk will generate a large structure that connects into one mega structure with the bubble columns going straight through.
Blocks: Perhaps coral bricks and prismarine? Or bring back the Crying Obsidian. Perhaps a new block that is pastel orange and mimics PurPur.
(If going infinite vertically is too much for the developers, perhaps after 10,000 sub-chunks, it automatically connects to -10,000 sub-chunk. Creating a ring?)