ok so here's my theory...
that episode wasn't actually real. It was some of the scariest shit i've ever seen. Compression cube torcher. The dying screams of dozens. B-15 walking in the room and seeing the remaining cube of flesh. Victor Timely just instantly being exploded into strings of flesh. A nuclear explosion of light that just expands until it gets to you, and then its all just black, the instant you die.
This is the stuff of nightmares.
What's something that exists at the TVA? The Department of Nightmares. So this is all happening in someone/s head, maybe their hallucinating it, something like that. I don't know how it's interfering specifically, but it could be any of these
the time door Victor went through actually went to the department of nightmares/he got lost entering the tva and went there
the failing of the time loom and tva technical issues means that some of the stuff in the department is seeping through
the flesh cube stuff did happen, but when they rebooted the tva, something in the department of nightmares lost containment
and here are some worse theories just for funsies
they introduce the Watcher and he says "damn, that sucks... back to the other tva" and we go back to ep 3
we're back in the castle at the end of time during s1, and kang says "and that's what happens if you kill me"... and sylvie doesn't kill him
the white explosions didn't actually kill anyone but instead removed a secret force field that was hiding the tva from the rest of the multiverse and now outside the window is the council of kangs
the white explosion beam didn't actually kill anyone, everyone just stands around blinking profusely from the light, and mobius says "so that just happened."
episode 5 takes place in Valhalla