Out of James' mouth

The context; trying to explain where England is:

D: ".....well, do you know where the Queen lives?"
James (puzzled): "The Queen lives on the water."
D: startled silence
James: (as though speaking to a child): "Well, it's a boat."
Me: "Ah, my parents took James and Eleanor to see the Queen Mary 2 while she was docked in Adelaide on Thursday!"