Why is this dog holding itself in such a weird position? Well, he is indicating! In other words he is telling us, by using his body language, where the source of the smell that we have taught him to search is located. This constitutes one of the basics of the apprenticeship of nosework.
This behavior can be instinctive (like a pointer dog holding his body like an arrow with one front leg up in the air, once he has smelled a wild animal) or it can be taught like Lengua is beautifully demonstrating in the picture up top. The indication is a crucial practice in a lot of different canine activities.
It can be active (digging to find truffles or barking in the presence of drugs) or passive (freezing the body in direction of the source of the Kong smell or sitting if there are bedbugs).
There are plenty of different kinds of indications and it is extremely important to use the one that is appropriate to the research that the dog is asked to perform. If an avalanche dog is sitting out of sight, oh well it is not very useful. If an explosive searching dog starts to scratch the source of the smell it can get very dangerous very fast.