First of all keep in mind that news headlines are not always grammatically correct. The writers take liberties with the language trying to convey an eye-catching message in the shortest possible space.
Your two sentences, however, are both grammatically correct but they don't mean exactly the same thing:
The worst hit was the eastern part of Taihu Lake
This means that of all the places that were hit, the worst one was the eastern part of Taihu Lake.
The worst hit was in the eastern part of Taihu Lake
This means that Taihu Lake was hit and that of all the places on Taihu Lake that were hit, the worst was in the eastern part of the lake.
I'll admit that the difference between these two is quite subtle and generally you might see either one used interchangeably. You would likely need to read the entire article to understand exactly what happened.