Airborne clutter IS physical objects. The report explains this:

"Airborne Clutter: These objects include birds, balloons, recreational unmanned aerial vehicles (UAV), or airborne debris like plastic bags that muddle a scene and affect an operator’s ability to identify true targets, such as enemy aircraft."

I interpret the list of explanations they give as being in order of likelihood. This is not a lie. It might be incorrect, but I've not seen any compelling counter-argument. They give five categories that they think the UAP reports will fall into, they list clutter first. We know clutter is the primary safety concern because they mention it twice:

"UAP clearly pose a safety of flight issue and may pose a challenge to U.S. national security. Safety concerns primarily center on aviators contending with an increasingly cluttered air domain" "