How to work of underwater laser

Not exactly. In 1963 a low-loss “optical window” of undersea communication for blue-green lasers between 420–532 nm was discovered. Since then research has not stopped. Blue/green laser light has the best transmissivity through water, however, some systems employ 635nm for underwater use in limited well defined applications with a few types of sensors.

The reasons that there aren't many applications of lasers in an underwater environment is associated with the way light is transmitted underwater.

There are two distinct causes for the energy loss of a light signal in seawater, one is absorption and the other is scattering - 2 separate problems:

Most light is absorbed by water -- Water absorbs ultraviolet, yellow and red and infrared radiation very strongly, so that beams in these spectral regions cannot be transmitted very far -- meaning that systems using such lasers are pretty useless. On the other hand, water seawater, that is transmits blue-green light pretty well -- losing "only" about 5% of its original intensity for every meter it transmits through water.

The effect of these two effects is that lasers used underwater have to be much more powerful than those used in air, where absorption is generally much lower than in water.