Well... we're talking about something that was written down by people over 2,000 years ago, and certainly not the scientific type. So don't be surprised...
Water. Why? The sky is blue, and the rain falls from it. So a rational explanation is that there's a big dome covering the earth (think of those science fiction stories where they have domed cities on the Moon or Mars) and water above that.
And above that is heaven, where God is.
And to show you that I'm not the one that concluded this...
http://sol.sci.uop.edu/~jfalward/Thr...edUniverse.htm
http://www.lhup.edu/~dsimanek/febible.htm
http://www.mukto-mona.com/new_site/m.../cosmology.htm
http://www.aarweb.org/syllabus/sylla...mmoncosmos.htm
http://www.infidels.org/library/mode...tll/chap2.html
http://www.asa3.org/ASA/PSCF/1969/JASA3-69Seely.html
All of these except the last has at least one diagram of what they thought the concept might look like. Admittedly they contradict each other, but it's not especially clear from the Bible's description.