Janko:
Question is this: what exactly does a strobe accomplish underwater, and since my camera allegedly has a built-in strobe does this do the trick?
Is 'strobe' just a word for "bunch of flashes that happen when you push the button that takes the picture"?
Well, a strobe fashes.
Frequently you'll find that in-camera or on-camera strobe lights are referred to as flash lights, while strobe designates off-camera lighting equipment. Form UW to studio light.
Whenever working with lights, the incoming angle equals the outgoing angle when reflected. That's why build-in flash lights cause red-eye (reflection of the red vessels inside the eyes) or backscatter (reflection of particles in the water). You'll get backscatter even in a pool ... . Ideally, you would have a strobe (or two to get even lighting, set at different outputs to get a desired ratio) facing the subject of your image at a 45 degree angle. If you shoot large subject that would mean enormous arms.
For wreck, caves, and even large pelagics many a professional photographer or filmer works with other divers who handle the lights.
The further away the strobes are from the lens and the higher their output is, the further the subject can be away from you.
Hence build-in flash lights work best for makro close-ups.
As an alternative to lights in shallow (read well lit) water you can use a correction lens to regain some of the colors. Don't know if they're available for your housing, I know Sony for example offers one for theirs. The disadvantage of colorfilters is that they deduct light, so you will need to make up for that at even shallower depth, or risk blurred images. And the ability to cover distance will deteriate that much quicker, too. Really not that good a solution.