The item appears to have two separate but related origins. The design of the item is clearly based on the Hocotate Ship from Pikmin 2, and its behaviour seems to be the similar to that of End of Day, Olimar's Final Smash. However, there is also an item of identical effect from Kid Icarus: Uprising - the Boom Rocket.
When thrown, it will wait 3 seconds, or until attacked, before flying offscreen into the sky, damaging and dragging any touching enemies with it for a potential KO, and then crash down after about 7 seconds from when it launched. If it is dealt enough damage before it gets off-screen, it will explode, damaging everyone nearby. However, when it detonates on re-entry the resulting explosion will not harm the person who activated it, allowing for safe strategic use of it. When it launches downward it also has a meteor effect on anyone who makes contact with it. It is also possible to push the bomb away with wind and have it land in another spot.
With the outward appearance of a Hocotate Freight ship, this is actually a bomb in disguise! Arm it by throwing it on the ground, and give it a nudge if you're impatient. It'll fly up into the sky, returning a short time later and exploding. Force your foes into the landing zone!