'Twas a spectacular light show at Manly last night, however the observers weren't looking skyward but across at the waves. Joel Coleman from Saltmotion Gallery just happened to be walking the beach with his camera (note to young photographers: never leave home unarmed). The blue light is called bioluminescence and I'll admit to compete ignorance and defer to Wikipedia:

"Bioluminescent bacteria are any light-producing bacteria, present mostly in sea water, marine sediments, surface of decomposing fish and in gut of marine animals. These bacteria may live free or in symbiosis with animals such as the Hawaiian Bobtail squid or terrestrial nematodes. The animals provide these bacteria a safe home and sufficient nutrition and use the light organs for camouflage, preying for food and attracting mates. The bacteria may deploy luminescence reaction for quorum sensing - ability to regulate gene expression in response to bacterial cell density."

Wikipedia suggests further reading if you're that way inclined or you can simply admire the photos below.