Dotty teetotaller immersed in water! (5)
I believe the answer is:
batty
'dotty' is the definition.
('batty' can be a synonym of 'dotty')
'teetotaller immersed in water' is the wordplay.
'teetotaller' becomes 'tt' (abbreviation).
'immersed in' indicates putting letters inside.
'water' becomes 'bay' (bay is a kind of water).
'tt' inserted inside 'bay' is 'BATTY'.
(Other definitions for batty that I've seen before include "Eccentric" , "Dotty!" , "out to lunch" , "Seemingly descriptive of vampire" , "As mad as a mouselike mammal" .)