Creatures of the Depths

Kraken Hatchlings
I like the idea of an optional defender. Phrasing wise, specifying after movement and before attacking is unnecessary as the effect replaces attacking so must be done at that point in the turn already. Also, saying they become defenders technically gives them a defender subtype without changing their abilities. If this was to prevent them moving, it would only have an effect if you tried moving them outside their turn with a spell. If that is what you want then perhaps the wording should be "Instead of attacking with a Kraken Hatchling, you may give it +3 until the beginning of its next turn. If you do it cannot move until the beginning of its next turn."

Deep-Sea Terrors
The current wording of their sea dweller ability doesn't stop them being summoned onto land and moving around as normal until they go into water, at which point they would be stuck. I think what you were going for needs this clarified by the ability starting with "Deep-Sea Terrors must be summoned onto water spaces. 

Lorthos, the Tidemaker
He should be a hero creature, not squad.
As above, the start of the turn is already before moving so thus does not need to be specified. To prevent restrictions due to lack of land, the TIDAL SURGE ability should say "...you may place a water counter on up to three spaces within four clear sight spaces of Lorthos...". Water counters, following MtG rules, could then be anything at hand or some nice preprinted water hexes which will avoid confusion as to which spaces have been flooded.
I'm not sure how flooding elevated spaces would work in terms of counting movement etc. Maybe specify that you can only choose non-elevated spaces for the ability?
He's going to go great with your Deep-Sea Terrors under Kiora. Maybe flooding the whole battlefield would be a legitimate tactic!