Bathroom sink (and maybe commode) has leaked for awhile and ruined a section of the plywood floor (soft and spongy). First run the water and check under house for signs of leakage, to try to pinpoint problem areas. Remove commode for access.

Drain water heater and set aside. Remove damaged section of flooring around commode, under sink and maybe under water heater. Find and fix any plumbing leaks. Cut access hole in bathroom wall sheetrock under sink, if necessary, to access sink plumbing and make repairs. Install new plywood section of flooring (probably 3/4") to replace any damaged flooring. Fill gaps and sand smooth. Install new peel-and-stick linoleum flooring. Put water heater back in place. Reset commode. Repair sheetrock. Install new floor molding if needed. Paint if needed. Remove damaged tile around and above tub faucet. Replace tile, grout seams. Clean up this wall area. Install new tub faucets.