The C02 gas is captured just before, during, or after combustion of fossil fuels, and is pumped under great pressure to depths (~8 to 10k feet) where it is actually a liquid. The gas itself is heavier than air. So, leakage is not the obvious problem one might picture - but it is a potential problem. The idea is to find places that would have been (or maybe formerly were) natural gas traps - e.g. anticlines with impermeable cap rock. At these depths, groundwater is typically briney and unusable for drinking or agriculture, so the threat to fresh water supplies is not great (unless briney artesian aquifers are punctured and un-cased holes allowed to carry brine upward into fresh aquifers - this has happened where drillers/
engineers/geologists are not paying attention).

Lake Nyos in Cameroon was a natural disaster involving a giant belch of CO2 from a volcanic lake, but not a good analogy for sequestration. Sequestration would not be done (we hope!) in a volcanic area where extra heat and pressure could force it back up.

It is a perfectly reasonable (though expensive at this point) technology. Here is my beef - why do anything that promotes continued usage of non-renewable hydrocarbons? Let's start the switch to renewables now, and not spend money and brainpower on putting band aids on a dirty and dying lifestyle (economystyle?)