The bug

Squids can spawn in waterlogged blocks. I'm not sure whether this is intended or not.

To reproduce

1. Create a superflat world (I used the "Redstone Ready" preset)
2. Make sure the /gamerule doMobSpawning is set to true
3. Set the time to day and make sure you're the only entity in the world
4. Run

   /fill ~ ~-1 ~ ~10 ~-11 ~10 oak_trapdoor[open=true,waterlogged=true]

   (I suggest you run this while standing on the ground. You can also use any other waterloggable block, I also tested this with oak slabs.)

5. Fly away and return to the water to cause the squids to spawn
6. Run

   /say @e[type=squid]

7. If no squids spawned, repeat from step 5.