Note that in Greek you call the sea 'θάλασσα'. Ωκεανός is used only for actual oceans the nearest of which is far away from Greece.
I am not hearing the omicron pronounced at all, even just as o. is it me or is it missing?
It's there. It's confusing because of the following ω, which has the same sound. You may notice that the first o you hear lasts twice than this o: ωκεανός. It's because it's two Os in one.
Why IS "this IS the sea" wrong... I'm guessing english is not your first language. Duo may want the cognate "ocean" in place of "sea", but should probably accept both.
Αυτός is used for masculine words (ocean is a masculine word). Αυτό is used for neutral words and αυτή for feminine words
According to your translation αυτός είναι could be" he is". However, when I wrote " he is", it was considered as a mistake. There is a contradiction in the system.
In English we wouldn't say "he is the ocean" unless we were feeling very poetical, so that can't be correct. The drop down translations don't always apply in the context of the phrase in the question - you have to use them judiciously.