Genesis 1:6 (ESV)

6 And God said, “Let there be an expanse in the midst of the waters, and let it separate the waters from the waters.”

The earth is still completely covered with water. Heaven, the sky as we know it, is not there yet. The Lord takes some of the water away from the earth and gives it a place above the earth. Thus, he separates the water that first covered the entire earth.