Cavitation resulting from underwater explosions in compressible multiphase or multicomponent flows presents significant challenges due to the dynamic nature of shock–cavitation–structure interactions, as well as the complex and discontinuous nature of the involved interfaces. Achieving accurate resolution of interfaces between different phases or components, in the presence of shocks, cavitating regions, and structural interactions, is crucial for modeling such problems. Furthermore, pressure convergence in simulations involving shock–cavitation–structure interactions requires accurate algorithms. In this research paper, we employ the diffuse interface method, also known as the interface-capturing scheme, to investigate cavitation in various underwater explosion test cases near different surfaces: a free surface and a rigid surface. The simulations are conducted using the unstructured compressible Navier–Stokes (UCNS3D) finite-volume framework employing central-weighted essentially non-oscillatory (CWENO) reconstruction schemes, utilizing the five-equation diffuse interface family of methods. Quantitative comparisons are made between the performance of both models. Additionally, we examine the effects of cavitation as a secondary loading source on structures, and evaluate the ability of the CWENO schemes to accurately capture and resolve material interfaces between fluids with minimal numerical dissipation or smearing. The results are compared with existing high-order methods and experimental data, where possible, to demonstrate the robustness of the CWENO schemes in simulating cavitation bubble dynamics, as well as their limitations within the current implementation of interface capturing.