It sounds like you would just want to control the distribution of one of your shaders by altitude. This can be done with a Surface Layer for example (see Altitude Constraints tab), or using a Distribution Shader as the Blend Shader input for many other shader types. Water is implemented as a shader as well as part of the Lake object, but in your case I think you would want to use the shader, otherwise the water's edge would be very sharp at the altitude of the lake. Still, it is not entirely clear what you want to achieve, whether it is actual water (which generally has a specific water level and a sharp-ish border), or simply wet surfaces, or actually having a rock appear to be "made of" water (which is more difficult and problematic).
- Oshyan