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I'm really vibing with this show, ngl. The art style is really growing on me and makes me want to read the manga! One thing I really like is all the references to Japanese folklore and literature. Here's some context for the references in this episode for anyone interested:
~!Bakeneko - a cat yōkai (not to be confused with the split-tailed nekomata) that is said to originate from cats who were killed because of the superstition that a cat raised for longer than 7 years would one day kill its owner.
The old lady that steals hair from Rashōmon - A down-on-his-luck servant encounters an old woman stealing hair from the bodies of corpses and is disgusted with her, but she explains that she only does so to make wigs so she can survive. If she didn't steal the hair, she would starve, and she points out that the woman she is taking hair from deceived people in life by selling snake meat and claiming it was fish. The servant says "You won't blame me, then, for taking your clothes. That's what I have to do to keep from starving to death," and robs her. (In this episode, Magi compares Mogura to that old woman, lol).
Princess Kaguya from The Tale of the Bamboo Cutter - (Toushirou mentions this story in his online class). One day an old bamboo cutter cuts open a mysterious shining stalk, only to find an infant the size of his thumb inside. He and his wife raise the girl, naming her Nayotake-no-Kaguya-hime (Princess Kaguya), and from then on, he finds a nugget of gold inside every bamboo stalk he cuts. They become rich, and the infant grows into a beautiful woman. Many noble suitors come to ask for her hand in marriage, but she devises five impossible tasks. Each noble tries to trick her and fails. The Emperor of Japan comes to ask for her hand in marriage, but even after growing close to her, she still rejects him, explaining she is not from this country. She eventually reveals that she is from the Moon, and she was sent to Earth and doomed to develop Upādāna (a Buddhist concept basically meaning "material attachment") as punishment for an unspecified crime. She must return to the moon, which greatly saddens her, as she developed love for her family and the Emperor. As she leaves, she sends an elixir of immortality to the Emperor and gives her robe to her foster parents. The heavenly people of the moon place a feather robe on her, and she ascends to the moon, forgetting her compassion for the people on Earth. Upon receiving the immortality elixer, the Emperor tells his servants to destroy it, as he does not wish to live an eternal life without her. He orders them to take her final letter and the elixer to the top of the mountain closest to the heavens and burn it, in hopes that the mountain is close enough to reach her. Legend says that this is where Mount Fuji's name originates, from 不死, fushi, meaning "immortality," and the smoke from the mountain (from when it used to be a more active volcano) comes from that letter still burning.!~