Things that are in the sky can fall into the water. “Rained down from the sky” implies this pretty plainly when the context is talking about fish, who are generally understood to be down below the sky in… water. “Down from,” not “in” the sky.

Not to mention that the fish in question seem to have been in a shallow "sloshing flood" at the time.

It says "as it rained down" from the sky -- once it hits the water it is no longer raining down.

I think it’s a reasonable assumption that once they were breathing it, there was more of it concurrently raining down, so the description seems fine to me.

It would continue to fall through the water but a lower speed. The water would be filled with tectonic debris which the fish breathed in.