In previous TES games the waters were generated on a certain level, you couldn't add them to mountains and other high levels of ground.
Activators are objects that you can use in the game.
But in Oblivion we already had water above sea level. And I'd assume Skyrim will too, given that Bethesda has shown us no shortage of waterfalls and flowing water. Admitably, Morrowind had waterfalls too despite not being able to have proper water at the top of them (Used in Vivec, most notably.) but in the case of what we've seen of Skyrim, the waterfalls seem like the sort that would need to have actual water at their source to look right.
how do you know water is an activator? where did you get this information?
We don't, it's never been said anywhere. The topic starter is assuming that since fishing is confirmed, water must be an activator, however, that is not necessarily the case, as we don't know how fishing is handled, just that it's in the game. I'm pretty sure at least one mod for Morrowind had fishing, so fishing does not automatically mean water is an activator, for that matter, I'm not even sure if Skyrim will handle activators in the same fashion as past games did, with the new engine and all that.