Indeed. This thread was created in June/July 2012, when we were all playing the old version. Since then, version 1.8.2. was released on Xbox. In version 1.8.2., they added the ocean biome, which allows for worlds that are entirely or almost entirely water. I don't think that was possible with the terrain generator in the prior versions.
As for the other post, you are talking about underwater caverns, and they exist here and there--I've found quite a few. If you swin around the ocean looking down, you will see light on occasion--that is one of the easiest ways to locate these caverns.