Top Ender Giggles - I still dont get wht is is funny though

Whilst traveling home last night during a rain storm, Daddy saw a field of Deer and pointed them out to Top Ender who was traveling in the front with him.

"It looks like Rain deer!" Daddy said as Baby Boy and I started to giggle in the back.

Top Ender sat thinking for a moment before replying

"There are two ways of saying it isn't there?"
"Yes, Top Ender" said Daddy
"Because, you could be saying the Deer look like Reindeer, or you could be saying it looks like rain and saying dear because it is to a close friend...."
"That is exactly right Top Ender" said Daddy
"I still don't get why it is funny though" said a pan faced Top Ender