Sea incense is a type of hold item that you can equip to a Pokemon. It will raise the power of Water-type attacks when you equip it.
For example:
If you have a water Pokemon such as Crawdaunt, making it hold the Sea incense would increase the amount of damage it would do to an opponent Pokemon when using a move like Surf or Bubble Beam.
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Step one: Have a male + female Marill/Azumarill. Step Two: Give one of them (doesn't matter which) a sea insence. Step three: Breed.
You put rock insence on a sudowoodo and you breed it.
Breed two Marrils, one of each gender, in the day care west of Mauville City. You will also need the item Sea Insence which you can find on Mt. Pyre when dropping through the holes in the floor. I think you just need to make one of the Marrils hold the item. Walk around for a bit and then talk to the man outside of the day care and he will give you an egg that will hatch into an azurill.
Sea horse, sea urchin, sea snail, sea anemone, squid
The anagram is Caribbean Sea.