Looking into Manly beach and stretching between Manly and Shelley beaches lies Cabbage Tree Bay, which is an aquatic reserve that aims to protect the marine life in the waters there. The reserve is an important sanctuary for underwater life such as weedy sea dragons and elegant wrasses, black cods and blue gropers.
When the water is calm, the snorkelling here is outstanding -- one of the best places in Sydney. There is no limit to what you can expect to see. When the water is not calm, then it is best to take the short walk to the harbour side, and try the Manly wharf shark net or Fairlight beach.
One warning to beginning snorkellers: don't go here if you're afraid of sharks! It is not unusual to see sharks here, though they are usually small (like dusky whalers) or non-agressive (like wobbegongs).