No passenger cabins are under water. Luggage has to fit in a standard x-ray machine in order to be carried aboard by passengers, thus larger suitcases are handed off to porters outside the terminal and go through separate security screening, then are moved aboard and delivered to the cabins. It is no different than at an airport. All luggage must be checked for security reasons.
As alluded to in other posts, the Bahamas Celebration was not originally a cruise ship but a ferry that did service in the Baltic area. It was converted into a cruise ship but there were limitations on what could be done. I think the ship still has the vehicle parking deck, for instance.