What is the beast from the water?

There is a extended metaphor that Golding uses throughout the novel to suggest that Jack is the symbol of Dictatorship, Hitler most likely as the book was written just after WWII. The children are fearing a beast from the water, it's just a rumor however. Much like the British fearing the German U-Boats or "Beasts from the sea". When Jack (or some one does)suggests the beast can fly, "Beasts from the Air (or sky)"is the next chapter, possibly a reference to the London bombings?Yes and this will carry on to next chapter

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The significance of the title is that the water represents the unknown territory. The boys do not go into the ocean, therefore, they do not know what is lurking in the water.