Oswald and the gang head down to the spot in the water that's clearly marked "no swimming" they have a swell time until the local constable shows up to enforce the law.
It's one of the better Oswald the Lucky Rabbits directed by Disney because of the many gags involved; usually they are transformation gags in which one thing becomes another, like an idea becoming a physical can of starch, or legs being stretched out endlessly. It was the stndard cartoon gag of the era.
The problem for Walt is that good times would not last. He would soon discover that although he had come up with Oswald, he did not own it, and soon his producers would grab it, and almost all of his taff along with it.