A short banca ride from Pagadian's port takes you out into Illana Bay to the cluster of small islands collectively known as Dao Dao. Dao Dao Gamay (the smaller one) has a thin curve of white sand and shallow turquoise water that is easy to wade and snorkel; Dao Dao Dako, slightly larger, has a few cottages and shaded picnic huts for hire.
The trip is the kind of cheap, unstructured day out that locals do at the weekend: bring food, bring water, hire a boat for a few hundred pesos at the bay front, and arrange a pickup time. Weekdays are nearly empty. The corals are thinned by years of fishing but the water is clean and the views back across the bay to the city are excellent.