Hi! I can actually answer this!
So this has been there since the original BG was first released in Battle for Azeroth.
So what happened?
Due to some hardware limitations during BFA, the problem with the Battleground was that they wanted the Sword of Sargeras to be the main focus in the background. But also it was too far away from the island to be visible on some clients.
So what the devs ended up doing is shifting the sword of Sargeras closer to the Battleground itself, while also forming the mountains you see. Because from your perspective on the Battleground, it still looks like the Sword is still inside Silithus, as you can't see over the mountains.
Now, why change the water level? That's more just a incidental design change when making the Battleground. More than likely they used a Ocean-Size tile to fit the battleground's shores. Incidentally what occurs is when the tile is also too big, you see how it effects other zones. It's also why you can still see structures beneath the water as it was unintended/never going to be seen by the player to begin with.
This entire map file is just one big illusion for the Battleground.
Fun fact: Isle of conquest is actually designed in the North west corner of Ice crown. As if you look around, a lot of the assets are from the Scarlet monastery/Vykrul keep in Ice crown.