I am five letter word that is under you.
If you remove my 1st letter, then I am over you.
If you remove my 1st and 2nd letters then I am all around you.
Two guards were on duty outside a barracks. One faced up the road to watch for anyone approaching from the North. The other looked down the road to see if anyone approached from the South. Suddenly one of them said to the other, "Why are you smiling?"