Whoo boy, this one didn't work for me. I can really get into grimdark stuff and I like realism in media. But I like stories where the grimdark and realism has a purpose. Gunslinger Girl is grimdark, but the darker moments of the brainwashing and being a child soldier was used as a commentary on the "civilized" world that the story was set in. The darkness in the first season of Puella Magi Madoka Magica was used to show that, even when the world takes advantage of you, you can still fight for something you believe in. You just can't be naive about it. The darkness that the characters experience in Houseki No Kuni was key to their character development, and representative of how we all grow up just a little bit faster if we have to go through some bad times. And because these have real-life parallels and play well by the rules the series set up, it has that feel of verisimilitude. It's applicable to reality.
But what is the narrative purpose of the darkness in this episode? We have a character who, by the first two episodes, is outgoing, optimistic, talented, and learned as hell. She was an active part in how the story developed before. She had to grow to become a person who can't be taken advantage of. She chose to help someone who stole from her, because it was a way of making the world a better place when it didn't cost her anything.
But she is completely PASSIVE in this episode at best, and morally reprehensible at worst. She sees some dark shit going on, and instead of saying "what can I do about this situation?", or at least asking "what is my duty in this situation", she doesn't think about it and just bounces. Even when her actions directly contributed to the darkness! Her interaction with the village directly led to the guard's death, and there is an implication that it started a wave of flower zombies that would devastate the town. She played a role in that. She isn't going to even try to fix it?! She isn't going to take ownership of her role?!
And in the second half, where she finds the village head's son grooming the servant girl and the village head being openly abusive, that's messed up. This could have led to an interesting conversation between the witch and the son, because there's some narrative potential that the son was oblivious to the power dynamic disparity and his role in the servant's misery. But nope, witch fixes the broken vase (literally treating the symptom instead of the disease), bounces, and then implies that the servant girl was going to commit suicide. Nice. (/s) The ending line of how she didn't want to know what happened to the servant girl was horrific. She has, through failing to intervene, taken part in an atrocity. She just lets it happen, and doesn't want to reflect on the consequences of her passivity. That's not something we would usually see in a point of view character unless it was a character flaw leading to some tragic end. That's not how things are going to progress in the story.
Characters can make mistakes. I like it when characters make mistakes, because it gives them an opportunity to reflect, learn and grow. Witch made mistakes and then learned nothing.
Maybe it was done just to be realistic? People make mistakes and do horrible things and then don't learn a thing, right? Ok, that's a nice thought, but realistic stories don't always make for COMPELLING stories. Sure you can write about a realistic story about someone in a dead end job, where they do the same thing every day and never do anything different, but unless the reality adds some useful commentary, moralization, or thematic point, I don't see how that story would end up very interesting to consume.
I hear that the stories get better as the LN progressed. It makes me wonder why the studio decided to adapt these stories if they are self-contained (as they appear to be), and there are better ones later on. But this episode didn't have the type of story I enjoy so I hope they try something different with Ep. 4.