Yesterday, I build an underwater base in 1.16.5. So I replaced all sand with sandstone and while I was doing this, I saw this bug.

One kelp block was generated next to the wall I was replacing and it didn't flood my base as it should be. Instead the kelp and the water or the waterlogged tag of the kelp doesn't seem to care about having a flood'able block next to it. So I made the following screenshot.

Btw.: Is it intentionally that furnaces will also melt things underwater? I would not expect so.