This level is, at least for me, the most annoying in the game. Full of terrible hitboxes, confusing darkness, and more terrible hitboxes, this level is the one I worry about the most late in a run. It is also the worst level to practice without practice codes which I would highly recommend getting.
It should be mentioned that the strat below is the one that I use. There are many more out there and I recommend looking at them before settling on mine. That being said, I do think that this one is a good balance of difficulty and speed although mabye not for players just learning the game.
Speed underwater is very different than on land. When hovering forward you can stop hovering and let go of the stick while Mario keeps driftin forward for a few seconds. It can be much more worthwile to understand how this works and use it to your advantage than to attempt to move Mario precisely in some situations
This very usefule mechanic works in the water as well as in mid-air. Also, if in y-cam underwater, hovering will not force you out of y-cam as it usually does. This makes Y-Turns very fast underwater and most optimal almost all the time
Hitboxes in this level are off a lot of the time for bubbles and teeth. With bubbles, the hitbox is almost never where the visible bubble is on the screen but below it or above it. Teeth, although having much better hitboxes than bubbles, can also be extremely annoying and the hitbox above the visible tooth
Approaching the Eel
When falling toward the eel, collect the bubble (see example) and then go directly above the center of the eel. After you do this the eel will start spinning. Wait for it to make it's sound and as soon as it does start hovering. This will allow you to clean or partially clean the first four teeth with the hover nozzle
The Gold Tooth
The Gold Tooth has a special mechanic in the eel fight that is very useful; unlike the white side teeth, the eel does not go down after it is cleaned. This allows Mario to clean this and a side tooth after it before the eel goes down (unless using the technique below)
Forcing an Attack
The eel starts starts to attack you once you reach a certain height in his mouth. This height is about at the corner of his mouth. As stated below, the eel will not go down if a tooth is sprayed while he is attacking you. Using this, it is possible to intentionally start an attack by sinking to that height and spraying the tooth without the eel going down. This saves a lot of time, but can be tricky to pull off
The strats used to clean the eel's teeth are named by how many teeth you clean before the eel goes down the first time (5-tooth, 6-tooth ect). In this text I will be describing 7-tooth as it is the one I know best
Once you have hover-cleaned the first four, go into y-cam and spray off the four middle teeth entirely. Hold down R the entire time and as soon as you clean one tooth, switch to the hover nozzle while turning to the next and switch back to clean it and repeat until all four middle teeth are clean. After the last middle tooth is clean, immediately turn in y-cam and clean one of the side teeth (try not to clean the gold one yet if you can. Usually if a white side tooth is cleaned the eel will close it's mouth and go down, however he does not do this while in the middle of a bite or suction animation. Usually by the time this tooth is clean he will be starting a bite and not go down.
While you are cleaning the side tooth, look at the tooth next to it and check if it is the gold one, if it is not you will need to go to the other side of the eel before he opens his mouth again. Find the gold tooth and pray it, and then spray a white tooth. The eel will go down and come back up for you to spray the last tooth.
If after you clean the gold tooth, you can use the technique described above and make the eel bite you, and then spray the last tooth. This will skip the eel going down but is harder
Cutscene Skip (CSS)
When Mario takes damage, he is invincible for a few seconds and starts blinking. If the cutscene is started during one of these blinks, then it will immediately skip the cutscene and put Mario back into a controllable state. This saves a lot of time since, if you skip the cutscene, you can be at the place the shine rests before it even gets there. On the North American or European versions of the game this skip can work with damage taken from drowning and can even be done accidentally, although with zero consistancy. This function does not exist on the Japanese version. In order to execute this skip, we can use the last tooth. Partially spray the tooth, then hover into it, then spray it off completely. If done correctly this setup can be consistant. Important: You must have at least three HP remaining when you skip the cutscene or you will drown before the cutscene time has elapsed. At the end of this time, Mario is hit for one HP and then his health refilled.
Floating Down and Getting the Shine
When sinking to the bottom of the cave, it is faster to fall near the walls than it is to fall in the center. The shine spawns to the right of the smallest rock in the ring. If you get there fast enough, the shine will be intangible until the time of the cutscene is elapsed.