I've seen this optical illusion in person, with large container ships, off the US Mid-Atlantic coast, and it's really cool. The photo in this article is fantastic. It shows an extreme example of the illusion. The ship appears to be, not just hovering over the water, but actually suspended in mid-air. In my view, it's worth clicking on the link just to see the photo.
Something just occurred to me. Is this actually an optical illusion? My idea of an optical illusion is one where your brain perceives something that is different from reality. Indeed, when I look it up I see examples of that (e.g. https://en.wikipedia.org/wiki/Optical_illusion ) But in this case your brain isn't doing anything wrong, the light reaching your eyes is what's "wrong" and your brain is correctly interpret…
It's much more related to optics than direct perception. Your brain is drawing the correct image its received, the light has just been bent so that it doesn't form an accurate representation of what you're trying to see.