Absolutely this is the case. The entrances or exits are below buildings...schools, hospitals, residential towers etc.
Right now, Israel does not know where they all are...bear in mind, Gaza is like an iceberg...you can only see what is above the water line - there is an entire network of tunnels under the city.
The buildings are now being bombed to achieve three things:
1) Destroy any factories/weapon caches/CCC housed within them;
2) Limit the entrance and exits from these tunnels; and finally
3) Clear a pathway for the tanks to enter and to limit places they can be fired upon.
Once the ground operation starts, the first priority will be search for tunnel openings. They find one, they start a huge blaze to trace the smoke and find additional entrances/exits using drones or human assets. Then clear these outs. Continue ad infinitum until all the rats have been smoked out. Then destroy the tunnels with a large amount of explosives which is likely to collapse any building above them as the ground has been already weakened.
At this stage, I would imagine the thinking is the hostages are (as good as) dead and the operation will be conducted with that in mind. Neutralising Hamas is the top priority...not certain collecting combatants to swop for hostages is high on the agenda. Recovering Israeli hostages is a bonus