For most of the cell lines I've come across, ATCC recommends storing them in the vapor phase of liquid nitrogen. I'm taking that to mean any place above the level of liquid in the nitrogen storage tank. What is the reason for this? Under what conditions/requirements would one store cells/tissue submerged in liquid?
The storage itself can be done both in the liquid and also in the vapor phase in the liquid nitrogen. Both have their advantages and disadvantages. In my experience there are two main reasons why storage in the vapor phase (although there may be temperature fluctuations when the nitrogen gets low) is recommended.
First, you avoid cross contaminations of your cells lines with mycoplasma (and possible other contaminants) which can get transferred into the liquid nitrogen phase and then into your other cultures. This is not a theoretical danger, but pretty real. See the papers in the reference below.
Then liquid nitrogen will enter your cryotubes (which is also the cause for contaminations). If you use tubes which are not explicitly made for this kind of storage (which is not a problem for the vapor phase storage) then the liquid nitrogen which made it into the tube will expand upon thawing and can cause your tube to explode. This can cause injuries. For more details see here and here.