There are various types of plywood available but in all instances plywood to be used in the marine environment should be constructed of hardwood sheets, and ideally be of British Standards 1088 (BS1088). This standard outlines that the wood should be free of voids and bonded with WBP (water boil proof) adhesive, which wont break down in the presence of moisture.
Plywood is a unique material in that it offers the hard wearing properties of timber, with high levels of strength and corrosion resistance, in flat, nearly homogenous, sheets. This makes the material quick and easy to work with - In the past a timber deck was laid down in numerous longitudinal planks, all of which have their own tendency to wrack, turn and warp, but thanks to plywood, a single uniform sheet can be bonded over the deck beams and sealed with deck paint or epoxy resin, etc. As Well as reducing time and skill necessary for the job, the areas where moisture can permeate through the deck is greatly reduced.
Like everything else in the marine environment, plywood it is not infallible. Persistent moisture will break down even the highest quality plywood, and this will happen where moisture is unable to escape, typically behind bulkhead tabbing and in wet bilges that have not been dried in an age.
This means plywood members mostly rot out of sight. Bulkheads that look sufficiently strong can have all the integrity of a chocolate brownie behind the tabbing. This is typical where long term deck leaks above the bulkhead have continued unabated, and, consequently, where this leak has filled the bilges. It is understandable then why so many 'project boats' suffer from rotten bulkheads, as they have been left unloved for decades, and are often full of water. In the worst case of this I have seen, the water completely filled the hull of a sailing yacht, leading the hull to collapse around the keel, this was likely due to the sheer weight of the water, the lack of hull support, and the bulkheads giving way due to the unnatural tension forces they were under.