A waterfall is a place where flowing water rapidly drops in elevation as it flows over a steep region or a cliff.
Typically, a river flows over a large step in the rocks that may have been formed by a fault line. As it increases its velocity at the edge of the waterfall, it plucks material from the riverbed. This causes the waterfall to carve deeper into the bed and to recede upstream. Often over time, the waterfall will recede back to form a canyon or gorge downstream as it recedes upstream, and it will carve deeper into the ridge above it.
Often, the rock stratum just below the more resistant shelf will be of a softer type, meaning that undercutting due to splashback will occur here to form a shallow cave-like formation known as a rock shelter or plunge pool under and behind the waterfall. Eventually, the outcropping, more resistant cap rock will collapse under pressure to add blocks of rock to the base of the waterfall.
Source: en.wikipedia.org/wiki/Waterfall - 25.03.2010
Waterfall enclosed by green
Here you nearly can smell the moist, fresh air!