Yes, they are water. Cells next to it are considered to be cells on the border (beach cells), so they have to be at the lowest altitude.
After I designed the puzzle, I noticed that the 3 open cells were very hard to distinguish from normal cells, so they got the wavy lines to make them more obvious. (Thanks to Maarten!) The rules about open cells within the island aren't really clear, which I also noticed only after creating this puzzle.