Revealing mistake: The shark attacks a little wooden platform in the water which 3 men then fall through. You can see this is made from a lightweight wood such as balsa so that it will break apart easily, and it's not the sort of wood such a thing should be made of.
Revealing mistake: When the baby shark smashes into the gate, not only is it a dummy by the way it looks, but the head actually compresses back into the body on impact.
Revealing mistake: When the shark crashes in the control room and eats Fred, "Fred" is a dummy. His hand moves around in the water in an unnatural manner.
Revealing mistake: When the baby shark dies it is an obvious fake rubber shark with no movement before it died and no reaction from the watching crowd.
Revealing mistake: As Mike and Kathryn are underwater with the submarine, they pass the control room, and in the next shot, as the submarine turns around, the front of it suddenly goes transparent. (00:32:00)
Revealing mistake: When the shark goes on a rampage at Sea World, whenever the fin goes above water, it is blatantly obvious that the fin is fake, and it is doubly obvious in some shots when we can see the welding line running right down the fin where the crew fused the two sides of the fin together.
Revealing mistake: About two-thirds of the way through the film, there is a wide shot of Jaws swimming. Keep in mind that a shark swims by the moving of its body and tail. It's quite obvious to see that Jaws is a matted-in puppet as his tail moves only once and he is propelled a long distance. Also note the fact that the tail move is quite mechanical and not the easy motion a real shark would make, and his body doesn't move at all. The shark in Shark Attack 3: Megalodon looked better than this.
Revealing mistake: Matte lines are visible on the submarine as Mike and his girlfriend drive it through the reef.
Revealing mistake: Very obvious fake dummy when Mike and his girlfriend view the dead body.
Revealing mistake: Matte lines are visible around Jaws when he crashes into the window of the control room.
Revealing mistake: When Shelby's corpse shows up in a Ben Gardner like jump scare, you can tell that the hair is not attached after they made a mold of Harry Grant's chest and face and edited it.
Revealing mistake: When the shark bites the fish in half just before the opening titles you can see the back of the fish tank the shot was being filmed in.
Answer: The lagoon was part of the theme park. Artificial with specific mammals inhabitants inside, warm and friendly.