From the Super Mario Wiki
A Watermelon Block is a large Watermelon shaped like a cube found in Super Mario Sunshine. Watermelon Blocks are green with dark stripes on the outside and red on the inside. They make a splashing noise when destroyed.
Watermelon Blocks are one of many kinds of Blocks found throughout Super Mario Sunshine, some others being Brick Blocks and Sand Cubes. They can only be destroyed by Ground Pounding them (as opposed to Brick Blocks, which can only be destroyed by jumping underneath them). After Mario destroys a Watermelon Block, it often drops a single Coin.