Electrolysis can effectively occur underwater, as the electrodes are submerged in water during the process. When hydrogen gas is released underwater, it forms bubbles that rise to the surface due to buoyancy. The behavior of hydrogen gas is similar to other gases released in water, as they all tend to rise and disperse. However, hydrogen's low density and high diffusivity mean it disperses quickly in water. The discussion emphasizes the importance of understanding gas behavior in aquatic environments and the implications for hydrogen production through electrolysis.