|This article is about an older version of DF.
Waterfalls, like any other falling water, generate mist. Mist gives your dwarves happy thoughts: "He was comforted by a lovely waterfall lately." Mist makes dwarves happy even if it's just from water cascading down a stairway, which in real life might be more of a cause for alarm. Note that dwarves must touch the mist to get the happy thought from a waterfall, just being near or seeing a waterfall will not generate a thought.
If it's cold enough for water to freeze, the waterfall will freeze as well, forming a partial wall.
Waterfalls also exist as a special map tile, found at the heads of underground rivers - these special floor tiles endlessly produce water, along with mist as long as the river is not blocked and allowed to fill completely.
Water pressure within waterfalls
Water that falls from above will exert pressure against the water already present at the bottom of the waterfall, which can cause channels dug after a waterfall to overflow. In order to prevent flooding, adequate drainage must be present, either in the form of a chasm (or bottomless pit) or a sufficiently wide gap at the edge of the map.
Waterfalls can be used to drive water through a fort with nothing but gravity power: just push it through whatever channels you desire and back out the cliff side (or other suitable drain) when it's done its course.
By creating a stream of falling water with screw pumps or making use of a river or brook higher up (this is more difficult, mostly because you have to get rid of the water on the other end), you can engineer a waterfall to take advantage of the happiness it causes. Such waterfalls can become highly complex indeed.
Placing such a device is most useful in crowded areas, such as your dining hall or a main hallway/stairway that all your dwarves pass through.
If your map has a chasm, consider building a sewage system that runs into the chasm, this way you can simply build a channel from a river to a specific area within your fortress and then have the water pour into the chasm. If you are feeling creative, create running water outlets across your fortress, all which run into your sewer system.
Design example (see pic at right)
(Causes a mess of water though, as seen Here at DFMA)
You need three z-levels to do this. On the bottom is the reservoir of water. The middle layer is the screw pump and the "meeting hall" where your dwarves will gather to enjoy the mist. On top is a narrow corridor that connects the pump chamber to the hole though the ceiling of the meeting hall. Under this hole is a grate that connects to the reservoir.
The pump pulls water out the reservoir and pushes it up above the meeting hall. The water falls down through the grate, back into the reservoir.
A more complicated Dwarven waterfall can be seen here, at DFMA, in movie form. A mistake to note: Water is hitting the side of the bridges, which splashes the water around and can knock dwarves in.