Diving bird seen around a good area of water (6)
I believe the answer is:
lagoon
'area of water' is the definition.
'diving bird seen around a good' is the wordplay.
'diving bird' becomes 'loon'.
'seen around' means one lot of letters goes inside another.
'a good' becomes 'ag' (I've seen this in other clues).
'loon' enclosing 'ag' is 'LAGOON'.
(Other definitions for lagoon that I've seen before include "Almost enclosed body of water" , "Stretch of water within an atoll" , "Salt water lake enclosed by coral or sand" , "Pool" , "A slat-water lake" .)