The correct explanation of how an octopus moving through water by ejecting water through a funnel illustrates Newton's Third Law is:
When the octopus ejects the water out, the water applies an equal force on the octopus in the opposite direction.
This is because Newton's Third Law states that for every action, there is an equal and opposite reaction. When the octopus pushes water out of its funnel, it creates a force in one direction (the ejection of water). Consequently, the water itself exerts an equal force back on the octopus in the opposite direction, propelling it forward.