A fable is a story that uses animals or other creatures to teach a moral lesson, so clearly "the Shape of Water" fits that definition. There is an animal at the center of the story, an ethereal "princess" that moves the action forward, and there are morality tales everywhere in the events that take place. Keeping track of the main theme might be the most complicated issue related to this movie, because everything else is a little too spoon fed to us. The shifting of the story to another time period, but one that feels familiar, and in fact has been referred top by many as "Camelot", makes it all seem even more like a fairy tale.
Guillermo del Toro has a mixed record of success as far as I can tell. "Pan Labyrinth" is a well respected and widely loved success. "Pacific Rim" was successful but not as widely admired, and the two "Hellboy" movies worked for fans but they don't seem to have connected with many outside of the comic book world. This is a film that would probably bring him a wider audience with one significant issue that is going to hold it back, the explicit sexuality. This is a beauty and the beast match which adds more to the story than our imaginations might need. For adult audiences with mature tastes, it is well presented and beautiful. An adolescent audience might find it gross or something to titter over. Younger audiences will probably find it creepy and that is what I mean about it being a bit too direct.
Ultimately the morality lesson that should be the central focus of the story is about the danger of loneliness and isolation. Elisa, the mute woman at the center of the story, has a solidary life with an older man as a friend and a co-worker that she can talk to, but she has no romantic life. The sadness of that is demonstrated almost immediately in the film by letting us in on her morning bathroom routine. Sally Hawkins is an average beauty but one that clearly has a spark of life that needs to be fed. Her mostly mute performance is designed to deliberately emphasize her separation from almost everyone else in the world. Del Toro shows her intimately but it is her face that gives us the greatest cues as to her feelings. Like Elisa, her neighbor Giles, played with fussy perfection by scene stealer Richard Jenkins, is isolted as well. He is an artist living in the post atomic age, he is a homosexual without the ability to create a connection that he so desperately crave. Octavia Spencer is Elisa's work friend Zelda, a black woman working in a white mans world with a husband who largely ignores her. Michael Stuhlbarg as Dr. Hoffstetler is also mostly on his own but for very different reasons. The character that ultimately connects them all is the amphibian man who is the most lonesome of all. He has been dragged away from his domain, locked in a vault, chained and for the most part mistreated.
Elisa's efforts to reach out to this unusual creature starts to unlock the loneliness surrounding her and the creature. As in most fables, before we can learn the lesson there have to be failures. This is the role that Giles fulfills. Unable to make a romance with a man he is attracted to, and clearly empathetic to the black residents of Baltimore who are also isolated in spite of their population, he capitulates to the needs of his one true friend and makes a gallant and dangerous stand against the oppressive feeling of being an outsider.
So far I have not mentioned the other major character of the film. He clearly qualifies as the villain of the piece, but his connection to the theme is interesting. Head of security at the facility to which he has brought his prize, Strickland has difficulty relating to others as well. He is verbally respectful at first of the two women who work as custodians at the facility, but that is all undermined by his non-verbal indifference to them. In one of the dangling strings of the story, he also has a sexual attraction to verbal silence. Elisa becomes an object of fascination and revulsion to him. The writer/director I think gives too much time to his personal peculiarities without connecting them very well to the morality lessons. Michael Shannon is a fine actor and he easily gets us to dislike him, we really don't need to see his sexual hangups or the awkward family life. Except for how it fetishizes the culture of the early sixties, his whole sub-plot about buying a Cadillac is a trip to no where.
Doug Jones has done these creature characters in a number of other movies and his body language is the main skill he is called upon to use. He manages to convey some emotions quite clearly with his posture. His arm movements are the tender element that allows us to accept Elisa's attraction to him. The make up and special effects prosthetics help his performance but he shows he is an actor with range, even if he does not have the name recognition of Andy Serkis.
As I mentioned, except for the explicitness of the relationship, this movie follows the patterns of a hundred other variations of the Beauty and the Beast motif. It is incredibly lovely to look at but it has a lot of side trips that lead to dead ends. You can get the impression that there is a social critique here but it is truncated at best and certainly heavy handed as it is being delivered . The love story works against every expectation, but you have to be a fairly sober viewer to appreciate it.