But why does the ship appear in that location, and not the water it's sitting on? What's special about the ship?
There is fog out past the ship. The water close to the viewer is reflecting the sky, and is blue, while water further out is reflecting the fog. The fog above the horizon blends in with the water reflecting the fog making it hard to see the true horizon line (but it is there in the picture if you look closely). The line where this reflection changes stands out much more strongly and the eye mistakes it for the horizon line.
This page has more examples of cases where these two different effects were confused: https://www.metabunk.org/threads/debunked-fata-morgana-or-mi...