Something very sketch is definitely going on. I'm not sure how much of the episode to believe really happened. Agatha's comportment completely shifting and her sudden awareness of who Teen is, the casual way Lilia responded to Alice's death and Teen's outburst, nobody was behaving in-character for the last scene. Maybe we just saw the beginning of a trial for Teen?
That last shot of Teen wearing (Wanda's?) crown after burying the witches in mud seemed to me like he may have been physically somewhere else? Potentially dreamwalking like Wanda did in DS2? Also the music in the credits after Billie Eilish sounded very similar to the Multiverse of Madness Main Titles.
I think someone else already mentioned it but the style of each episode is great. It gives each episode unique feel and is a nice spiritual callback to WandaVision where each episode was a different era of TV (mostly).
"Where is my book?" - "Where did you last have it?" - "on a broom :("
That was delivered so perfectly
Oh my good they killed Alice!
Agatha was reeking of Joker energy in that conversation with "Teen", taunting him for being "like his mother"... down to the big smile.
Also, "You should see me in a crown" obviously is a reference when seeing "Teen" wear a Wanda-esque crown.... but the song being by Billie Eilish? After we just had confirmation from the Ouija board that Nicholas Scratch seems indeed to be dead?
I think that's a setup for next episode. Is she doing something in there with Alice's corpse? Rio said (last?) episode that she is tagging along on the Road to "get my bodies."