I'd say the water animation is fine, it's not too distracting.
So far, the thing that bothers me most is the lack of cast shadows : The different shading of roof sides indicates that the sun is to the right, then tall structures should cast a shadow to the left. Not much darker than the ground, not very long (let's say 1 pixel per 10 pixels of building height), just enough to make the vertical structure "pop" from the ground. And without dithering, since at this very low resolution, it would be a real "pixel soup".

Hey, sounds like a plan! just received sort of dream job so I didn't have much time to work on my game but I added shadows to every building where I felt that they were needed, also as said before I changed farmlands - not sure if for better or worse :
I kind of like new farmlands, though they still pop a lot into the picture...
Now I am off to make water slightly more satisfying, this crude three frame animation kills me

So I replaced sky with the ocean, but I wonder should I spend time animating seashore foaming waves or should I leave it static?
For now I'll go and try to fix everything else what we've spoken about

Tried to dabble a bit with grass, now I am not sure if plain old one color was better or if this looks better

Well I have been wondering because I noticed myself that my productivity drops when I work with music, applies both to programming and pixel art... I usually tap out (sort of a short few second black out) and just stare at the screen as I subconsciously listen to the music  but after years of doing everything whilst listening to music, I find the silence sort of distracting if you can call it so.. So lately I have been experimenting with just some guitar or piano subtle instrumentals in the background  seems to  distract me way less and fills in that empty void of silence..