Its increasingly looking like it was either pilot(s) suicide or the pilot(s) hijacking the plane. Without knowing the specifics, the plane could have been transitioning from a radar environment to non radar. Once notified they were in a non radar environment they knew they could fly undetected and could turn the plane off course.
If you look at the turn - it wasn't back towards KL but rather laterally to the west. Like I said earlier turning the transponder off doesn't make the plane disappear from radar. Once the plane transitioned to a radar environment it would just show up as a target which is my guess at what they saw at 2 am. Depending on the radar's capabilities they should be able to determine the aircraft's altitude.
Another guess is that the plane went back into a non radar environment since they don't have anything else on the plane past 2 am. That area was searched and debris was not found so it probably safe to assume that it continued on somewhere.
Its probably safe to assume that either one of the pilot's was incapacitated since I doubt they would allow the other pilot to go rogue OR the pilots were working together. I mean its also possible that the flight deck was compromised and a passenger(s) hijacked the plane as well.
I'm not even 100% certain they can ascertain that the target that was observed at 2 am was intact MH370 since there wouldn't be any data associated with the target since the transponders were off. If it was MH370 then you would have to take that point and extend it in every direction 4-5 hours @ 560mph ~ 2,800 miles. That would be a massive area to search but you would be able to determine if the plane was put in the ocean or landed at some unknown location. Putting an aircraft of that size down is going to require a surface free of obstacles and at least 7,000 feet in length....not sure how many places you are going to find like that.