These words are homonyms (i.e., they sound the same—have the same pronunciation).
Naval is an adjective describing the sea-going branch of the military (military boats). Naval is a simple word, used mainly in certain phrases, such as naval forces or naval academy, etc.
Navel is a noun meaning, primarily, “belly-button”—the place on your stomach where you were attached to your mother by an umbilical cord, until birth. Navel also metaphorically describes a location of central importance:
Paris was long considered the navel of European culture.