You are supposed to apply via the embassy in the country you are located. So if you are in Bali, you need to go through the Thai embassy in Jakarta, etc. they literally ask where you are located
Clearly the officer made a mistake. It is a “strange” mistake though. Others have mentioned how to correct, but if you plan to travel internationally before May 9th it doesn’t matter
So Thailand is switching its last embassies from in person visa application to the e-visa platform on Jan 1st. However, this doesn’t change any regulations. If you are from a country that is visa exempt (60 days), you remain visa exempt. However, if you need a visa, you apply online instead of in person.