There are several different ways to read these lines. Is the author trying to heighten the sense of tragedy by describing Curley’s wife’s beauty, fragility and youth? The fact that Steinbeck has made a point of giving Curley’s wife beauty and innocence in death strikes some readers as a little disturbing, as if suggesting that a woman gains true purity only when dead. In life, Curley’s wife’s beauty meant trouble, but in death her sexuality is ‘safe’.
An alternate reading is that Curley’s wife looks peaceful in death because she could never find peace in life. She had a dream of how life should be that was never fulfilled, that could never come true in this world. By emphasising her beauty and innocence in death, the author is reinforcing something Crooks said earlier; that our dreams cannot be achieved in this life. This foreshadows events to come; George and Lennie may also find that their dream is only attainable in death.
The term "water snake" may refer to any snake that lives in or around fresh water, although some species are specifically named "water snake" (eg in the genus Enhydris). They are usually quite small and coloured to match the dappled reflections in water.
A periscope is a device used for seeing things from a concealed position; on a submarine, it shows what is above the surface of the water. As much of a swimming snake's body may be underwater, its protruding head can seem like a periscope.
George’s dream had always held an Eden-like or Heaven-like quality, and now it is suggested that the only way to reach it is, indeed, through death. This recalls the words of Crooks, who told Lennie and Candy that men cannot achieve such a dream in this world.
This also ties in with the death of Curley’s wife; it was a woman’s allure that caused Lennie to get into trouble and so destroyed their dream, just as Eve caused the fall from Eden. Perhaps Steinbeck is suggesting that Eden is out of reach of mankind, at least until people can learn to trust and help each other more.