La UFO out in space is observing you standing here on Earth, it

will see you actually moving but you don't feel it, why so?

The earth rotates on an axis, just like when u see the clouds "moving" it's not the clouds the earth is rotating on its axis. This causes Day and Night. Yes, in your perspective the UFO will be moving although if u were inside the UFO it would appear that the East is moving when it is.