No, this toy is not waterproof and water damage is a very common problem among users. I would not advise this toy for any young children prone to putting toys in their mouths. If you do run into water problems this might help.
In my experience the toy is durable and no, you will not crack the screen like a regular phone. However many others have had issues, whether this is due to some being defecting or simply having different gauges of "durable" I do not know. If you run into a specific part breaking this might be helpful.