Two people were smiling after Santiago turned himself into the wind. Who were they and why was each smiling?

The Chief smiled because he saw that Santiago "understood the glory of God."

The Alchemist smiled because he saw that Santiago would be the perfect disciple..

From the text:

But there were two people who were smiling: the alchemist, because he had found his perfect disciple, and the chief, because that disciple had understood the glory of God.