When i moved here, the crazy old lady two doors down put out meat scraps for the wild life. She attracted a lot of skunks, and the next door neighbor’s dog chased the skunks. We frequently smelled the aftermath.
Not a reason to want to move, but an annoyance.
I’d complain to the town if a neighbor were intentionally directing water to my property.
Your neighbor certainly might be catching and holding your dog for some weird passive-aggressive reason. Stranger is right about trusting your fear of the neighbor. But replying to the op’s direct question, it doesn’t strike me as incredibly weird to hold a loose dog in a house, and as they returned it to you unharmed and without a fuss, it’s not obvious to me that they must be out to get you. They might be. Or they might just be maintaining control over the dog until you are free to engage.
Unless i missed some details about how you got the dog back.