Not all of the air breathed in makes it to the gas exchange surface, so some air breathed out still has oxygen in it. Also, not all air makes it out of the body, so some air breathed in doesn't have oxygen in it any more. This isn't a very efficient way of ventilating the lungs, as not all of the oxygen coming into the body is absorbed by the blood.
Usually mammals can only live on land because they can only breathe air. This is another limitation of their gas exchange system. Some mammals have adapted to live in water, but they still have to come up to the surface to breathe air. They can only hold their breaths for a limited time, so must come up to the surface often to