To keep the water surface to a minimum:
Step 1, remove smallest inlets and islands: inner buffers 250m, invert selection, delete, delete non-contiguous areas, buffers 250m, invert selection, delete.
Step 2, smooth shorelines: buffers 1000m, invert selection, delete, inner buffers 1000m, invert selection, delete.
Step 3, simplify and smooth: simplify 500m, spline 5.
The distances above are somewhat arbitrary, so they'll need to be adapted to specific needs. Increase the distances above for more generalization, decrease them for less generalization.
To maximize the water surface instead, change step 1 to perform buffers first, then inner buffers, delete non-contiguous areas. Next, continue with steps 2 and 3.
I'm attaching a GIF of the end result of the first method, minimizing the water surface (black line) and the alternative method (white line), which maximizes it.
Does anyone have a different or better method?