What does a water dragon do for fun?

While reptiles do have emotions, they do not have complex emotions the way birds and mammals do. As a result...they do not play. They don't have any reason to. Reptiles spend most of their time contentedly moving from the cooler to the warmer side of their cage, to regulate their body temperature.

Water dragons do appear to enjoy swimming and bathing themselves in their water pool, so I suppose that may count as 'fun' for them--it is an activity they seem to find enjoyable. Disturbingly for their owner, they may sink to the bottom, close their eyes, and go into oxygen conservation mode. This makes them appear dead, but they're actually fine. They can stay down for a LONG time this way.

They will also dig burrows, if given the proper materials, but that can get terribly messy.

Water dragons also appear to enjoy hunting their live insect prey.

Always remember that reptiles are not like mammals or birds--they don't like company, and everything they enjoy doing is part of their wild behavior. They never actually like being handled, nor do they really like their owner--they may like the treats their owner offers, though. You can just tell your water dragon's REAL opinion from that sidelong stare he gives you.... <lol>