In a blender, combine watermelon, lime zest and juice, tequila and agave and blend until smooth, adding watermelon in batches if necessary.
Pour mixture through a fine-mesh strainer into a 9-by-13-inch freezer-safe dish. Press with a spoon to extract as much juice as possible. Discard pulp.
Freeze for 1 hour. Using a fork, scrape up and incorporate ice crystals. Continue scraping up ice crystals every 30 minutes with a fork, until desired consistency, about 2 hours more. Spoon into 6 bowls, garnish each with a lime wedge, if desired, and serve.
Notes
Can omit the tequila if you want a non-alcohol version.