But I've always assumed that atmosphere management is a critical part of Underrail's infrastructure. There could be oxygen generators working on simple water electrolysis combined with CO2 scrubbers, similar to real-life submarines. Or maybe Underrail has some fancy scifi tech approximating photosynthesis. Using electric power instead of sunlight to convert carbon dioxide and water into oxygen and useful byproducts. In any case, human-built ventilation systems must be critical. There is no wind underground. Air must be very stale in remote caves far from settlements.
While there isn't a whole lot in the game about that, I remember one of the SGS residents (Bisson, I think?) mentioning that a past conflict with the Faceless started when someone cut off their air flow somehow. Therefore, I'd assume that significant Faceless settlements (unlike the temporary ones we see in the game) require oxygenated air to be constantly pumped in.
However, it would seem to me that pretty much all of the animals in Underrail require oxygen. Especially something like rathounds, which exist pretty much everywhere we can access in the game.
In real life, multicellular animals that can survive without oxygen tend to be rather rudimentary and worm-like, so maybe some don't need oxygen (deep worms maybe? Perhaps those wormy things we see going in and out of the ground but can't interact with?), but I'm suspecting that the places with a lot of animal life have some sort of natural production or ingress of oxygenated air and water.
Unless, of course, all of the animals were introduced by Biocorp, which is a definite possibility.
there is sadly no gameplay mechanic for low oxygen levels.
"It is pitch black. You are likely to die with lips turning blue."