"The bear lost its garden chair in the sea water."
Translation:Bjørnen mistede sin havestol i havvandet.
There are no elves or fairies either, or bears with garden chairs, but that doesn't mean we can't talk about them or tell stories where they do exist.
Language is not restricted to what is, and "garden water" is no less meaningful than "garden snake", except that we just happen to use garden snake much more often.
Garden water (havevand) is water in a garden or water from a garden, nothing odd about that. It's a perfectly grammatical compound noun in Danish, just probably not one anyone has ever needed or will ever need.