The Sharpie isn't toxic, I don't think anyone's planning on eating any of the fondant animals, will it be okay if I draw in the details with one?

I have no idea but I dont think I would try it. However here's a bump maybe someone with more experience than me can better advise you

I personally wouldn't do it b/c you never know who is going to be there and who might try to eat it. I would use either the americolor fine tip food markers, or use a fine paint brush and some gel color

And would I paint on with watered down gel color?

I usually use americolor to do details, but i have used a sharpie. I mostly bake for family and friends and when I have used the sharpie I just let them know not to eat the figure.