A pressurized gas cylinder inside the bouy would cause the float to oscillate based on the pressure differential of the water depth above as the waves pass. By being mounted completely below the water surface the bouys are less susceptible to damage during heavy storms.
A one square kilometer area of ocean floor 100 bouys could power a town with 55,000 homes. A pilot test was successful conducted off the coast of Portugal in 2004 and engineering work for a larger scale test is ongoing right now.
[Source: AWS Ocean Energy via TreeHugger]