The pilots are having a good time. They know what the object is.
Yes, they were clearly laughing about locking on to it, a bird, pretending they don't know what it is. If it were a real UFO, they would be a bit more serious. Stupid Drudge and even the WaPo fell for it.
You can clearly see the what looks like waves on the water surface so the object can't be very large compared to them. It's just a dot.