What does "in low water" mean in this context?
They argued a little about Sophocles, then in low water.
(Source, suggesting that the OP's transcription incorrectly ommited that final period.)
It means that in those days their school's curriculum allocated less time to the plays of Sophocles than was customary at other times in the school's history. The implied metaphor is that curriculums follow fashions, which rise and ebb like the tides at a beach.