Those of us who dive in the PNW wear thick neoprene, which very successfully muffles sound.
Water actually transmits sound better than air does; if your external auditory canal is filled with water, sound will very effectively get to the eardrum to get transduced into signals to the brain. However, an air/water interface decreases sound transmission, so if your canal is filled with air and water is outside of the air, less sound energy will get to the drum. Vented plugs will decrease sound transmission, as any solid object that completely obdurate the canal will do.
I think, if you are perceiving less sound than your buddies are able to do, one of several things may be true. You may not be fully equalizing -- any transmural pressure across the drum will reduced its ability to vibrate and transmit sound. You may be making a lot of noise of your own . . . some of our students seem to exhale almost continuously, so they are constantly surrounded by their noisy bubbles. Or you may be so focused on other things that you are, in fact, "hearing" the sounds, but not perceiving them consciously.