Vidar Rapp

The water surface tesselation refers to the amount of polygons being used to render the surface (not the shading) of the water in the game.

They probably rendered it very highres previously which was probably unnecessary since most of the appearance of the water surface is due to the normal-maps used on it, thanks to per-pixel lighting.

Don't know if that's making it any clearer for a non-game developer though. ;)