The Dinghy is the naval version of the Cloak. It is created when a Cloak moves onto a Port, and it retains the stats and abilities of the Cloak. For example, it can hide from enemy units (see Cloak for details). Also, it can "attack" an adjacent enemy city, which spawns Daggers within the city's borders and consumes the Dinghy.
Unlike a Boat, the Dinghy cannot be upgraded into other naval units.