The bases are plastic card, cut to size. I used a Tamiya plastic scriber (
http://www.amazon.com/gp/product/B002KKBVTC/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B002KKBVTC&linkCode=as2&tag=dirfir-20&linkId=OIH3BTVNN4YYGCEO) for the first time and it made plastic cutting a breeze - I highly recommend picking one up.
The waves were made by mixing some wood putty with water, spreading it on the card, and tapping my finger on the putty. This created the peaks of the waves - I just did it until I was satisfied with the look. I don't have a ratio for water to putty for you - you just have to add a little water at a time until the putty does what you need it to do. You won't get waves if the putty is too thick/dry, so you have to experiment. I suppose I can state that the consistency is like a thin peanut butter. Fortunately, you can just scrape the putty off and keep mixing until you get things correct. I believe Dave used a similar process for his bases, but his seas are smoother.
The colors on the bases are a little off - they are tending way toward white in the photo, when they look more graduated in real life. I used the old Citadel flip top paints, so it probably won't do me much good to track them down and tell you. What I will tell you is that I primed them black, painted them with a thinned dark blue, then drybrushed them with a lighter blue, then a lighter drybrush of a blue-grey, then finally a very light drybrush of white. I'll see if I can figure out which paints I used and annotate this post - as usual, I didn't write down the recipe.
As for sitting flat, the waves aren't really that tall. I had originally planned on just setting the ships on the bases as the putty dried, but I was afraid of ruining the bases. They are only raised by a slight bit, and I should be able to scrape down any offending waves with a hobby knife or judicious use of a dremel tip in an electric screwdriver.
I've got plans to also help hide any gaps between the ships and the bases - I'll detail those later as I do them.
