First, let's look at two relevant definition/meanings of plural waters found in Oxford.
waters (plural -#5) - an area of sea or ocean belonging to a particular country
waters (plural -#3) - the water in a particular lake, river, sea or ocean
I got it.
Now the confusion - what should replace 'X', 'Y', 'Z'? Water or Waters?
The color of (the?) 'X' is magenta because at that place, (the?) 'Y' of Indian Ocean and (the?) 'Z' of South Atlantic Ocean which are red and green respectively meet.
Also, does it take the article the? Because in one official document from the Journal of Marine Research (American Government), I found this sentence (without the) -
...continues into the Indian Ocean while the rest of it mixes with water of Indian Ocean...