Clay is a general term used to describe a variety of soil types, including clay, but also other materials. Hardpan is another generic term used to describe what the next layer of soil under the top layer. Soils are always in layers, the deeper down you go, the more you find.
Here, red clay is the most common building material. It's fantastic for ponds and dams because once it's compacted, it's water proof. This works great for roads if you build up the road higher then the surrounding land round it. Rain lands on the road, flows off of the road, into the ditch, and then away. If the ditches have good slope to them, and they are compacted, they dry out quickly and remain solid. If there isn't any slope, the longer the water remains sitting, the softer the soil gets, but there is a limit to how far down that moisture will go. Usually it will just sit until it evaporates.
With roads, and dealing with wet areas, it's because the water didn't have anywhere to go, and it's been sitting in that one spot for so long that it's soaked into the soil, creating a soft area. This soft area needs to be removed down to solid, or dry soil. Usually you can mix that wet, or soft soil with clean dry soil and put it back into the hole. Compact it and build it up higher to create a crown. If compacted properly, water will run off of the soil and you will never have a problem again. Road grade gravel can then be used on top of this compacted soil.
It really is this simple.
