Why can't it be 'You are swimming in the sea'. It is the plural form of usted so it stays 'you'.
I don't think so, not in this case at least. If you are at the beach with your family and the kids are going to play in the sea, you just use the word "mar". Because it would be strange to say that "ellos van a jugar en el océano" as it would be in english (I suppose?). But if you are going to say about a ship that sinked in the middle of the ocean, I guess you could use both océano and mar. So it depends on the context. Cierto?