The waterfall is a removed landmark in Kart Kingdom. It was removed in the beta stage of Kart Kingdom, but it still exists in the game files. Sometimes it is seen in blog posts. This landmark is very well missed, and many old beta users have photos of the waterfall. Also, the waterfall was spotted in the friends list in the right corner. It was spotted by SirGawain8.
The Grand Glade section on the Kart Kingdom map still has the waterfall icon.
The waterfall can still be seen in the background of the log-in screen.
The waterfall actually leads into a pond (about the same size as the other pond by the Games Tent) behind the Quest Truck, but now that the waterfall is gone, it is technically unknown whether there is still a pond there, although all the images in the game with the waterfall present still have the pond behind the Quest Truck.
The pond behind the Quest Truck is most likely still there, because the creators thought no one would notice.
The waterfall is still in the game files.