Yes, Death in the Water 2's experience is stymied by limited gameplay. However, it's also important to note that Lighthouse Games appears to be iterating on this concept quite a bit. The original Death in the Water is a $2.99 Steam game where you shoot at the same sharks with the same speargun until you die. No Sirens, no interesting environments, and definitely no Kraken.
Framed in this context, the jump from the first Death in the Water to its sequel is like going from a web-swinging Flash game to Spider-Man: Miles Morales. It's the same concept, but it's been improved and expanded upon so much that it's a completely different thing.