This is a cool darkish floating jungle village!

There are burning campfires and hopping dogs here. Note that they'll relight after you put them out, so don't bother with that or with the slime. Just put each one out near the lake, grab its tail and pull. You should be able to slingshot it into the lake which will put it out completely.

Send all 3 into the lake and you're done! The shine ends up just above mushroom next to lake.

Super Mario Sunshine Walkthrough