With just a single photodiode, it's probably panning back and forth around the laser dot to either build a small array of pixels on which it can do a quick edge-detect filter, or, more likely I think, running the panning results through a small FFT and throwing a HPF on that for edge detection.

I would've figured it was a CCD and edge-detect (HPF) until they said it was a single photodetector.

It's harmless, you just have to trap it by drawing a circle around it.

No. It's harmless until you try to trap it. Then it gets pissed off. You ever seen a pissed off laser? HAVE YOU?!