Potholes can occur in a number of ways, all of them have to do with water, a freeze / thaw cycle and cracks in the road surface.
Water seeps through cracks in the road surface and softens the sub-base under the pavement, this weakens the sub-base until it can no longer support the pavement above it or the traffic loads placed on it.
Thaw water seeps into cracks in the pavement or sub-base. Temperatures drop and water freezes. (This is the main cause of potholes in our climate). We refer to this a freeze/thaw cycles. These freeze/thaw cycles occur repeatedly during the spring season and, in the last few years, over the winter season as well. The freezing causes the sub-base to expand, which can cause localized pavement failure, a pothole.
Water in surface cracks, or in between concrete and bituminous (asphalt) overlays can freeze causing pieces of pavement to “pop” out.