From the Super Mario Wiki
Crystal Taps are colorful octahedral switches that appear in Super Mario 64 and Super Mario 64 DS that will either lower or raise the water level in Wet-Dry World. If Mario touches one, the water will drain or rise to the level of the Crystal Tap. There are seven in all and placed in strategic locations across Wet-Dry World. There are five in the main area, and two in the underwater town.
If Mario activates a tap in the downtown, there will be no way for him to get back to the main area. He can swim back through the tunnel and reach the other side, but the cage will be far too tall to get over. It is possible, though, to use Luigi's Power Flower ability to turn invisible and get back into the main area.