Wood rot is caused by several kinds of fungi. Mold and stain fungi primarily discolor wood and doesn't cause any significant loss in strength. Decay fungi, on the other hand, actually break down the cellular structure of wood, which does cause significant strength loss. They do this by secreting enzymes or producing chemical reactions that dissolve some of the constituents of wood cell walls. The activity of decay fungi is apparent when the wood becomes either darker or lighter than surrounding wood, develops checks and cracks in the discolored area, and is obviously softer or more brittle than solid wood.
Decay fungi are primitive plants, and like most other organisms, they require four basic conditions to survive. In some respects, they need the same things that people need to live:
Oxygen. In most cases, the air needs to contain at least 20 percent oxygen for decay fungi to operate.
Water, but not too much. Water is essential for all living things, and decay fungi are no exception. Wood is porous and can hold water, much like a sponge. If there is only a little water present in the wood, the fungi cannot survive. If there is too much, it can deprive the fungi of the oxygen it needs as in the case of the logs in your question, which were completely submerged under water that had a low oxygen content. A moisture content of 20 percent to 30 percent provides sufficient water for fungi while allowing oxygen to be present within the wood cells.
Moderate temperatures. The ideal temperature for decay fungi is between 70 degrees F and 90 degrees F. Most decay fungi die when exposed to temperatures above 130 degrees F and become dormant at temperatures below 40 degrees F.
Food. In this case, the food for the fungi is the wood itself. In addition to being a food source, wood shelters the fungi, insulating it from temperature extremes and providing a reserve of oxygen and water.
All of the above conditions must be met in order for decay fungi to thrive if even one is removed from the equation, fungi cannot attack the wood. Although we can control moisture to some extent, it is difficult to completely keep water, oxygen, or favorable temperatures from affecting wood used outdoors.
Depriving the fungi of its food source by using chemical wood preservatives that make wood inedible to decay fungi is the traditional method of wood protection. The pressure-treatment process drives such preservatives deep into the wood fiber. New methods being developed seek to modify the wood fiber itself with heat or by creating a barrier that decay fungi cannot penetrate.