Do divers hear better underwater

They can hear more, but not better.

Because of the density of water, vibrations are changed in pitch, and may be muffled and garbled. Since clarity is the most important factor in hearing, underwater communication is mostly done by hand signals instead.

On the other hand, sound moves more quickly underwater, and as a result you can hear from a greater distance. Things can be heard from a lot further away and/or are louder than in air. Unfortunately, because of the higher speed, and reflections from the bottom, sound direction is almost impossible to determine by ear.