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Yes, sewage smells can originate from a floor drain. If the P-Trap in the floor drain dries out or if there's a clog or other issue in the plumbing system, sewer gasses can escape through the drain, causing nasty odors. Regularly pouring water into the drain helps maintain the water seal and prevent those smells, but if the smell persists, you should have a plumbing professional inspect the drain for potential problems.

Depending on the home, wastewater either goes into a septic tank and seeps back into the backyard or is sent via sewer system to a local sewage-treatment plant. Septic systems naturally separate different components of the waste so that it can naturally and safely disperse it. They are usually reserved for homes not served by a municipal sewage department (like rural homes). A treatment plant, on the other hand, speeds up that process through screening and purification.

There are a few things that can happen to your sewer system if you don’t fix it. These include rainwater entering it and causing rust and corrosion, dirt and debris leading to blockages, small animals getting stuck inside and clogging your sewer line or entering your home, and shortening the sewer system’s life span. 

Without a cap, nothing prevents toxic and non-toxic gasses like methane and hydrogen sulfide from slowly escaping your sewer system and entering your home and the surrounding atmosphere, resulting in a foul sewer odor throughout your house.

There are many things that could cause your basement floor drain to back up. One significant cause of a drainage backup is flushing non-flushable items, such as wipes, paper towels, and facial tissue. Other causes of a backed-up basement floor drain include tree roots impeding the drain pipe or an accumulation of hair, oil, and grease.