That's right. The tessellated water mesh remains in the scene, apparently ebbing and flowing beneath the land throughout, even though it's not visible. The GPU is doing the work of creating the mesh, despite the fact that the water will be completely occluded by other objects in the final, rendered frame. That's true here, and we've found that it's also the case in other outdoor areas of the game with a coastline nearby.
Obviously, that's quite a bit needless of GPU geometry processing load. We'd have expected the game engine to include a simple optimization that would set a boundary for the water at or near the coastline, so the GPU isn't doing this tessellation work unnecessarily.