Combine flour, milk, baking powder, and 1/2 teaspoon salt together in a bowl until dough is well mixed.
Melt bacon grease in a skillet over medium heat; add water and salt to taste.
Form dough into 2x3/4-inch rectangles. Place dough rectangles in the bacon grease mixture, leaving a small space between each. Cover skillet with a tight-fitting lid; steam and fry until dumplings are browned, 10 to 15 minutes. Serve dumplings with sliced watermelon.