Sit around lake on fine sand (4)
I believe the answer is:
silt
'fine sand' is the definition.
(I've seen this in another clue)
'sit around lake' is the wordplay.
'around' indicates putting letters inside.
'lake' becomes 'L' (geographical abbreviation).
'sit' placed around 'l' is 'SILT'.
'on' acts as a link.
(Other definitions for silt that I've seen before include "Fine river sediment" , "Sediment in a stream" , "Mud deposit in a river" , "Sedimentary deposit" , "Fine deposited material" .)