What did the soldiers mean when they replied "exactly" to Tom Cruise's question "Where is the safety"?

The conversation actually goes like this:

Cruise: "Listen, man. I could hurt someone with this..."

Soldier: "Not with the safety on. you won't."

Cruise: "Wait. Where's the safety?"

Soldier: "Exactly."

It's clear from the full dialogue that the "Exactly" gag centers around the fact that Cruise's character doesn't know how the suit works, and by putting the safety on he will not be able to injure anyone in a "friendly fire" incident.

First of all, Tom Cruises' character is not a soldier and is therefore not used to warfare, guns, etc.

Secondly, in a lot of warfare, friendly fire can cause a lot of casualties.

So, explaining about the safety and then not telling him where it is gives a subtle message that he's not going to be able to fire his gun and endanger anyone. Thus providing an extra level of 'safety' for his comrades...

We need to summarize the battle initiation dialogue of character Master Sergeant Farell just before the helicopter explodes. All along, this character is shown not to have high hopes from Cage, that he would show extraordinary heroism in the battlefield. And this is turn was complemented by a somewhat similar approach from the team members as well.

Master Sergeant Farell : [in the helicopter] two minutes to drop, it's alright to be scared. Remember, there is no courage without fear.

Master Sergeant Farell : Griff, I want you to take care of Private Cage.

Griff : What, all day long?

Master Sergeant Farell : Something tells me it won't be that long.

And then we need to consider the individual comments from the teammates as it becomes quite evident that they weren't very hopeful of Cage's combat skills.

To answer your question: I didn't get the joke. Why did they say "exactly"? The joke was that Cage was asking for the safety switch on the gun he was supposed to shoot from as we see later, he takes quite a while to figure that out on the battlefield itself.

But the when the team mates answered "Exactly", what they meant was "Yes..Exactly!!...where is the safety in this endeavor; specially for you!". Meaning its not going to be safe for Cage at all. Not even the remotest possibility that he would survive this battle. Hence the lines:

1. "There's a dead guy in it(battle suit)."
2. "Watch your back coz no one else will.". These are two of the most repeated lines from all the loops. And incidentally the lines which makes him realize that it is a loop.