(a) Without Rashi, the most likely explanation of the Gemara is that it refers to dolphins, which are like people in that they give birth to live young and nurse them on milk. Musaf Ha'aruch (Erech: Dolfin) records that the Greeks and Romans referred to a certain large fish, apparently the dolphin, that had these characteristics as "the Man of the sea" (hence, "Bnei Yama").

(b) Rashi, however, states: "There are fish in the sea with which half of them is in the form of man and half in the form of a fish, called saraina in Old French."

Although throughout history, sailors claim to have seen mermaids, half human and half fish (see Aruch, Erech 'Sirena'), there is no evidence for such things, nor does it seem biologically possible.

However there is a group of mammals, the manatees and dugongs, which may be the creature in question. They possess a tail like that of a dolphin. Their forequarters look a little like a walrus, with flippers. These animals have a peculiar habit of floating vertically in the water, with just their heads and shoulders sticking out. Furthermore, their breasts are placed in the same position as those of humans, unlike other animals, and they carry their young in their arms while nursing, just as a human does.

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Rabbi Nosson Slifkin