Those bubbles do collapse, but the problem is that as they collapse they generate tiny little shockwaves. Apart from being noisy, these implosions can be quite destructive—the constant bubble collapses are fairly energetic, and cause cyclic stresses on materials. Over time, these can actually eat away at the surface of the propeller [0].

[0]: https://en.wikipedia.org/wiki/Cavitation

Think of what happens to a fluid when exposed to a vacuum.

The water surrounding the vacuum instantly vaporizes and creates bubbles of water vapor. Then these small vacuum bubbles collapse and create small shockwaves that create noise and damage the propeller/screw.