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How can water be flowing out of a hill?
The ground beneath our feet is not just rock, or at least, not just one kind of rock. Many different types of rock exist, and they have very different properties. Often, different types of rocks exist in horizontal layers beneath the land surface. Some layers are more porous than others, and at a certain depth below ground the pores and fractures in these rocks can be totally filled with water (an aquifer). When precipitation falls and seeps into the ground, it moves downward until it hits a rock layer which is so dense and unfractured that it won't allow water to easily move through it. When this happens it is easier for the water to start moving horizontally across the more porous rock layer. Sometimes when building a road, the layers are cut into and revealed, and water can be seen dripping out through the exposed layers.
You are really seeing an exposed portion of water-bearing subsoil and bedrock. The water table is the part of the subsurface ground where the material below it is saturated with water - this is the material that wells tap into to get water. Water will flow along the water table at a downward angle, similar to how it flows on the earth's surface. It follows soil and rock that are permeable (allows water to move through it) and eventually will find its way to stream beds, lakes, and the ocean. But if a road is cut deep enough and goes into the water table then the water can emerge from the rock.
By the way, it is seepage such as this that helps keep water flowing in many creeks and streams during periods of drought. Rivers not only lose water to the ground from water seeping into the ground, but rivers often gain water from seepage of water from the ground below into the river banks and river beds.