From A Wiki of Ice and Fire
Blackwater Bay is a large body of water on the east coast of Westeros. The great city of King's Landing sits on Blackwater Bay where the Blackwater Rush pours into the bay.
Blackwater Bay is an inlet of the narrow sea, separated from it by the Gullet, held between the arms of Crackclaw Point to the north and Massey's Hook to the south, with the island of Dragonstone guarding the entrance to the bay. Elements of the Iron Throne fleet patrol the Bay and ensure it is kept free from piracy. Aside from King's Landing and Dragonstone, the largest port on the bay is Duskendale (which serves as a secondary port for King's Landing when the main port is overwhelmed with traffic), whilst the largest island is Driftmark, the seat of House Velaryon.
A unique geological feature called the Spears of the Merling King sits within the bay. Within the spears, the currents are strong and treacherous.
A Clash of Kings
The Battle of the Blackwater occurs at the mouth of the river where it meets the bay. This battle pits the forces loyal to Stannis Baratheon against those loyal to Joffrey Baratheon. Tyrion Lannister, the King's Hand at the time, devises a system with a chain boom pulled across where the river widens into the bay. This chain is raised once the majority of Stannis's fleet is up river and wildfire is deployed to ignite many of the ships. The current pulls these burning ships towards the mouth of the river and against the chain, which results in the destruction of much of the fleet.
References and Notes