When you select that option to create a world and use a biome like Ocean, the game generates a regular world with land, but instead of the usual blocks, it uses the blocks in the Ocean biome. I thought that this option would generate an entire world like an ocean, but it doesn't.
Thank you for your report!
We are tracking this issue in MC-236884, so this ticket is being resolved and linked as a duplicate.
That ticket has already been resolved as Works As Intended, which means this is not considered a bug and will not be fixed. Please do not leave a comment on the linked ticket.
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