Billy walks around Stormwind with Adam. Clearly he's pretty bored and trying to start a conversation, but Adam won't listen to any of his lies, comments, references or exaggerations:

""I heard that there are these huge fish that can walk on land to hunt, and eat people!""
""My daddy says that in the ocean, there are fish so big they could swallow a whole ship.""
""I heard a story about this golden fish, and if you caught it you would get three wishes!""
""And one time, at camp, I caught a fish that was bigger than I am!!""
""I caught a big one last week, it had three eyes!""
""My daddy can catch more fish than your dady!""
""Look! Look! I caught something! Aww...it's just a stinky ol' boot.""
""Think there are any fish in here?""

Eventually they say ""C'mon let's try somewhere else"" and move along, leaving you to fish in peace.

Adam is ace at replying though.
""If you fished as well as you talked the ocean wouldn't have any fish left.""

""And one time, at camp, I caught a fish that was bigger than I am!!""
Clearly a reference to the American Pie movies, wherein Michelle, the marching band geek, always refers to her band camp memories with the introduction: ""And this one time, and band camp, [...]"".

""I heard a story about this Golden Fish, and if you caught it you could get 3 wishes!""

Its not a golden fish, perse, but... Mr. Pinchy, anyone? :P

""I caught a big one last week, it had three eyes!""

Reference to The Simpsons, maybe?

What exactly is he doing in Terrokar and Karazhan?

""I heard that there are these huge fish that can walk on land to hunt, and eat people!""
Murlocs? Naga? Take your pick.
""My daddy says that in the ocean, there are fish so big they could swallow a whole ship.""
https://vanillawowdb.com/?npc=23899 https://vanillawowdb.com/?npc=23899  Tethyr in Dustwallow.
""I heard a story about this golden fish, and if you caught it you would get three wishes!""
https://vanillawowdb.com/?item=27388 https://vanillawowdb.com/?item=27388  Mr. Pinchy. Not so much golden.. but shiny..
""And one time, at camp, I caught a fish that was bigger than I am!""
Hes a short person. Not hard to think this'n up.
""I caught a big one last week, it had three eyes!""
Can't think of anything for this one.

But I don't think he's lying so much as his tales are just hard to accept.

""Look! Look! I caught something! Aww...it's just a stinky ol' boot."" -Billy
""Liar!"" -Adam