Plenty of animals live in underground nests and burrows. As long as the nest is above the water table, the level below which the ground is saturated, the nest will be okay. Having an underground nest is a good way to keep it safe from predators.
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some do get mad. I stepped on a mudwasp nest once. It was awful.
Must have been the very edge as only 1 got me.
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Underground provides very convenient prebuilt walls and hides it from view. Flooding is a potential issue, but insects are difficult to drown, the walls are porous and allow water to drain, and often most insects dig their burrows with potential flooding in mind.
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