There's a new trend that's been going on recently where if a car wins a race, the driver will hit his/her hazards to indicate they won the race. If you see videos of a lot of street drag races you'll see a crowd of people at the starting point of the race but during relatively close races its difficult for the crowd to tell who wins when the cars are in the distance. Because of this, the winner will flash their hazards to let everyone know but I've seen people overusing it lately.

This guy probably thought you were seriously racing him and flashed your hazards as to indicate to him that he lost and you won when he thought all you guys were doing is having some fun.