A waterfall is a place where your expedition may say and rest to gain sanity. One rest brings 40 sanity over 5 days.
Staying to rest may trigger several events, based on the characteristics of your followers (kleptomania, insanity, etc.). You may rest several times at the same overhang.
Resting at a waterfall is an inefficient way to gain sanity, as it only brings you 40 and take 5 days of your expedition. Consider using a waterfall only when absolutely necessary.