So, what in the name of Spacers is happening there?
Cool, isn't it! A sundog is a visual illusion caused when ice crystals in the sky reflect the Sun and make it appear as a ghost, or a rainbow either side. The Atlas basically flew straight through the cloud and the sonic shock waves from the rocket dispersed the ice crystals. In effect, the rocket shot the sundog and blew it away. The reaction of the crowd is just great, as it must have been an incredible sight.
Video from NASA of the launch doesn't show this as well because a sundog is only visible when the the ice crystals in the cloud are positioned just right to the observer. On this occasion the crowd got a better view than NASA.
Happy Wonderment, Spacers!