What is used by submarines and surface ships to communicate?

Aside from Radio (used while submarines are at periscope depth), submarines and surface ships use underwater telephones to communicate. Essentially it's just a high-frequency sonar communication system, where the voice signal is modulated, transmitted by the UWT system, then demodulated by the receiving system so the voice transmission is understood.

If you understand how modern Scuba communications work, it's the same thing; in fact, the technology came from the Navy to begin with.

The only drawback to the UWT system is the ocean environment itself. Like any underwater sound transmission system, the sound is subject to the thermal, depth, and salinity conditions of the transmitting source.