Article says they built a sand bunker around the bomb to provide protection in case this happened. Sounds like the bunker did its job!

In fact, they often just build a bunker and do a controlled detonation - the bunker directs the explosion forces upwards, where they don't harm anything. Not sure why they decided to defuse this one.

The seismic wave propagating through the ground can damage nearby buildings.

When it is easy, they defuse it. But usually it is all rust, so controlled demolition is the preferred way to go and usually always done, unless it is hard because of sensible surroundings. But then the bomb gets transported.

Nearby gas mains and harbour sea wall, I believe.

Looks like it was maybe dredged up and that's a) how they found it and b) why it's on the side there.