The two talking, and other races, are machines that cover themselves however they like. These two are machines with artificial skins. That is normal. Fully meat beings are not. At least that is how I always read this story.
* This is a virtual environment and the "meat actors" are depicting avatars of virtual/not-meat entities inhabiting that world. That's why there's inconsistencies with real life, for example the red guy's clothes. This was what I thought when I first saw this short.
* This was really an exchange of concepts and data in a language not really suitable for humans to understand. So what you are seeing is not what actually took place, but a translation. Some machine took the abstract data interchange and translated it to what it thought would be more appropriate for a meat head to understand, including setting it up in an environment that would make sense to a human. But it made some mistakes (the clothes, the weird behavior of some characters). This could have predicted AI Video slop, in a way.
Perhaps the makers of the movie neglected to read the story before creating a script?
Like a sibling comment mentions, they talk about "meat sounds"... using meat sounds! Why would they find it surprising if that's how they are communicating in the short film? They are not depicted as communicating via telepathy or whatever.
(Yes, I understand the limitations of low budget shorts. But it doesn't mean it has to work...)
I'd imagine British spies in WWII sometimes wore swastikas to blend in?
They infiltrating to investigate. It needn't be an endorsement of the practice.
I didn't hate it, and I always appreciate the charm of low budget productions. I'm just saying this particular adaptation doesn't work for me, and trying to explain why.
One low budget feature-length film about aliens I quite liked (though it obviously has a higher budget, and of course its own set of flaws; and to be clear I'm not arguing both productions are in the same ballpark!) is "The Vast of Night" [1]. I quite liked the actors and the directorial choices.
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I get the constraints of short indie films, I love them regardless, but in this particular case it completely misses the mark.
It doesn't match my idea that these are two energy/mechanical beings discussing a faraway planet from their spaceship or whatever, talking theory without actually seeing the beings they are discussing.
More seriously, what you describe is partly the short story. The short film adaptation doesn't quite work for me, for the reasons I explained in other comments.
Also, funny to see Ben Bailey outside of a taxi cab.