From Codex 3.1:
Incapacitated (Effect)
An Incapacitated creature cannot take any actions, including moving, attacking, guarding, or casting spells. It cannot make a counterstrike. It cannot use any Defenses, except for mandatory-reveal enchantments that count as a Defense. It cannot guard; remove any guard markers on it. A Flying creature loses, and cannot gain, the Flying trait as long as it is Incapacitated. Any damage barrier on an Incapacitated creature continues to function normally. Other creatures may ignore an Incapacitated creature, and it cannot hinder the movememt of enemies. An Incapacitated creature still takes an Action Phase (normally, the action marker is simply flipped over). Conjurations cannot be Incapacitated. Mages are affected by Incapacitation differently. A Mage's mind is so powerful that even if he is Incapacitated he can still work his magic! An Incapacitated Mage can still use actions to cast quick non-attack spells. He cannot cast full spells or attack spells.
I've highlighted the key part in red.... which doesn't seem to apply to my question (see *edit* below).
Example case: Sherean Leviathan:
If Sherean Leviathan becomes Incapacitated (say, by [mwcard=MW1I26]Sleep[/mwcard]) while in a zone with an
aquatic terrain attached, does it still
restrain enemy non-Mage non-aquatic creatures?
(Aside: It's interesting that Sherean Leviathan also restrains Flying creatures, which causes them to lose Flying... so he's kind of like a Knockdown + Tanglevine in one - albeit far more difficult to destroy and with a powerful bite!)
Similarly, the same question applies to lots of creatures, from friendly affects like [mwcard=MW1C20]Highland Unicorn[/mwcard] to damaging effects like Disciple of Radiance. Does Incapacitate turn off their card text - e.g. allow enemies to ignore it, and/or prevent friendly creatures from being affected by it?
*edit* Partially answered my own question, as the codex states that Ignore is a game term:
Ignore (Game Term)
An ignored enemy creature cannot hinder movement of friendly creatures. An ignored enemy creature that is guarding does not have to be attacked when making a melee attack.
This implies that the card text of an Incapacitated creature still applies, since nothing in the codex states otherwise (e.g. it can't guard and can't hinder anything and can't take actions and loses some traits like Flying and any defenses, but nothing explicitly says it loses any other abilities).