A graven image is any power you set up outside yourself and then bow to, whether an object above, a thing on the earth, or a shape in the waters. To carve one is to forget that your own imagination is the sole cause of everything you meet, and to hand that cause over to something you can point at. This is the whole of idolatry: worshipping anything outside your own consciousness as though it moved your life.
Heaven, earth and the waters name every region where a person is tempted to locate his god, and none of them holds it. You inescapably become and display whatever state you are conscious of being, so the state you assume is the only image with power. The command is not about statues. A person is never ruled by anything outside the awareness he is holding as his own.