Is this bearing in contact with water/soap all the time when washing?
No, it is higher then the water level.
I don't understand how or why they really fail eather.
The seal that should keep the water out of the bearing leaks.
This lets water get into the bearing. After the bearing is able to get wet things start to go bad.
Why does the seal fail and leak?
It does not sit in water?
Even if it did they have made top load washer were the tub seals sit in water all the time and they held up better.