Tutto Italia has a nice little patio. It is not on the water but you may have a partial view of Illuminations. I'm not sure, so maybe someone can weigh in that knows??? (It's set back to the side so maybe you'd really have no view.) It looks out onto the courtyard and fountain. There is no entertainment, unless you count the street performer (great act, BTW).
If all else fails, enjoying a glass of wine and the cheese plate from Boulangerie Patisserie while watching Illuminations...
. . . no
. . . several resort bars have inside entertainment in their bar areas
. . . your best bet for outside drinking is to sit by a resort pool bar and drink