First off, police say cameras malfunctioned in the process of recording the video, which is why most of the picture is black ... but you can still hear audio of McGuire's encounter with officers in a strip mall parking lot in Dunedin, Fla. on Feb. 7.

The conversation begins with cops asking the 25-year-old Toronto Blue Jays player if he was aware that people had called them saying they had seen him while he was half-naked in his car pleasuring himself.

McGuire tried to explain the situation ... before telling the cops, "I realized, what an idiot. What a dumb place to be hanging out."

That's when one of the officers asked the MLB player straight-up, "Why would you come to a parking lot just to masturbate?"

Reese responded, "I just, I don't know."

To his credit, McGuire went on to tell the officer he was SUPER sorry for the incident ... saying, "I've realized that I made a mistake having my pants down and doing what I was doing ... I really am apologetic. And, I know I shouldn't have been doing this."

McGuire was eventually charged with 1st-degree misdemeanor exposure of sexual organs and was facing up to 1 year in jail if convicted.

Reese, though, cut a deal with prosecutors earlier this month ... pleading no contest to a reduced 2nd-degree misdemeanor charge of disorderly conduct.

In exchange, a spokesperson for the State Attorney's Office in Pinellas County told us his punishment was nothing more than fines and court costs.