The tagging is not conventional. the area should be tagged either with landuse=reservoir or natural=water. The waterway=dam tag should be used solely for the actual dam keeping the water there.
I’ve put both tags on the water & added a waterway=dam based on the aerial imagery.
In addition I’ve tweaked it so the wood icons shouldnt appear over the water.
Hi Ben
you have linked to the Cycle Map layer of the Openstreetmap, but I don’t think that displays dams, but it does display water bodies. The water body behind the dam wall displays fine on the Standard layer of the map, though see below.
A couple of points…
Whilst it is common to call these water bodies dams in Australia, when editing the openstreetmap the outline of the water body should be tagged natural=water plus water=reservoir and in this case probably name=Dargan’s Dam
The part that is tagged waterway=dam is normally the construction that has been built to hold back the water. In this case it appears to be a curved wall at the southern end of the water body. Due to it’s large size, the Hinze Dam in southeast Qld http://www.openstreetmap.org/#map=16/-28.0505/153.2925 has the surrounding earth mount and the wall area tagged as the dam, but in your dam it appears to be just the wall that holds back the water.
Incidentally, I noticed that the Bing imagery was used, but there is also more recent and higher resolution LPI NSW imagery available (at least in JOSM)