The white bar is 'hit/health ponits' and the blue bar is suposed to represent flooding damage.
The stock game has very poor damage modeling, sinking ships is just a matter of reducing the HP's to zero. The so called 'flooding damage' doesn't seem to do much at all, I can't remember ever seeing it go up or down of its own accord other than when they actually take a hit.
As I'm sure you'd allready know TDW has a good fix for this.
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