"So as far as you were able to tell, the sea leads nowhere." Then all of Ned's suspicions about them being stranded and, in essence, ship-wrecked (without the vessel, of course), are likely true. He wonders how much of the water upon which Moana sailed was constructed by the Observers, or if any of what they experience is, in fact, reality. The implications of such things is enough to make Ned feel as though is skull is cracking in two, so he'll keep that to himself for now. Instead, he shifts his focus to Moana.

"A letter? Do you know who sent it to you?"