tl;dr: The popular explanation of this image is likely wrong. It could be, rather, an inferior mirage.
Many news articles claim this is a superior mirage, that is, one that's due to a temperature inversion. Here's an image borrowed from hyperphysics that shows the idea: warm air lies above cold, and the rays bend toward the slower medium (the colder air) causing objects near the horizon to appear higher.
I am QUITE CONFIDENT that this in not the correct explanation for the image in question. The photo was apparently taken over the southern English Channel in February 2021. The water temperature, and therefore the temperature of the air very close to the sea surface, was around 10 C. The air a bit higher up was likely colder (weather records show that it was never far above 10 C in that month, and often considerably below). Rather than a superior mirage, it could be an inferior mirage (assuming it's not a fake)--the same kind as causes the appearance of water on a hot road. The rays near the surface bend upward, causing them to cross those that originate at a slightly higher angle. The actual mirage is not the ship, but the sky below it. Here is a sketch:
The result is that the ship does not appear distorted--the rays from it don't deflect--and the distortion that would be apparent in the rays that do deflect doesn't appear because there are no features in the sky to distort.
This actually happens routinely on chilly days where I live--albeit to less dramatic effect. A thin strip of sky appears below distant land. It is definitely an inferior mirage as it happens exclusively on days when the air is colder than the water (usually below freezing). I took this photo with my phone after seeing the reporting on the Cornwall mirage:
If I'd had a telephoto lens rather than a cell phone, the depth of the apparent layer of sky would appear similar to that in the Cornwall image (though the level of detail likely would not measure up).