Try and do a little experiment. Dig a small pool and fill it with water. Then start digging it deeper and deeper. Then remove the water from the original pool at the top. You will see that all the water that was in the deeper area of the pit was only flowing water, not source blocks.Hmm....not in my experience. At least not if you put your quarry over the ocean with no solid blocks anywhere at the surface. No flowing water there, instead source blocks will be generated as your quarry removes the solid blocks. It's been a while since I did this though, maybe things changed?
Problem/trick is that in deep water vertical flowing water is indistinguishable from source blocks. You can use this to quickly make a large cosmetic sea/pool that acts exactly like the real thing. But you really dont want to have continuous block updates in it.
Problem is that the Quarry is forcing constant block updates throughout the water, which causes constant recalculations of the flowing water. A source block needs to scan the nearby area for solid blocks and probably other water blocks to figure out how it is supposed to flow. It probably reaches the same result and no visible change occurs, but it still recalculates all the flowing water in the region afaik.Also, I don't understand that "Flowing" blocks will impose any performance penalty at all. They are not more prone than anything else to generating or propagating block updates, and don't impose any rendering penalty when hidden/surrounded by water - any more than regular water source blocks would.
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