I stumbled across that same video, last weekend. (my other hobby is military history).
The effect is made with cotton balls, paint. Set in resin/epoxy medium.
It took him sometime to figure out how to make the turbulent water and air bubble effects, in the epoxy.
He has another diorama of a Japanese Zero fighter plane, on fire and smoking. Just moments before ditching into the sea.. I believe it even has a LED to simulate the fire.
Very Impressive!!!
Jerry G