As was fairly evident the first time we entered Michiru’s Dream World, said world is a kind of prison (or birdcage) isolating her from the outside world and from any connections to anyone.
Ukawa, who can alter anything that’s not living, decides this isn’t any kind of world to live in, and so, by placing a ring on her finger and activating her ability, erases all of the buildings in the world in an effort to “rectify” it.
In doing so, Ukawa doesn’t really destroy the dream world but only the buildings, but hopes that the shock will drive Michiru to remember that she’s Katagiri Honoka.
As Urachi uses abilities like Ukawa’s and Kagaya’s to further his goals, he tells his underling Sakuin that it’s good that she hates her ability, because all ability users should hate their own abilities. It makes me wonder what, if anything, is Urachi’s ability…beyond being an ominous jerk.
But hey, at least he doesn’t follow through on his desire to “snuff out” a troublemaker like Kei…at least this week. Rather, he pretty much leaves Kei alone, and Kei capitalizes by figuring out that the inverted world they’ve been in is actually a world within the dream world, which isn’t inverted.
Approaching the wall of white wind with Haruki (who describes the building-less place they’re in as looking “like the end of the world”), Kei appeals to Chiruchiru for an audience, and a hole in the wall appears.
Kei and Haruki go through, and after jumping on a bus with a destination marked “Chiruchiru” find themselves at school… another Monogatari quality to go with all the lengthy dialogue.
In a dark classroom, Chiruchiru, fake god and creation of Michiru, isolates Kei and Haruki, and tries to play some mind games with both, perhaps to test their mettle. He hits a lot of nails on the head with Haruki in particular, even taking her form, resulting in Haruki debating with Haruki the merits of—and threats to—her special relationship with Kei.
While it’s clear she just plain likes the guy, it’s never been as explicitly stated what her situation is than by Chiruchiru: “strongly tied down by one boy”; a “facade of not wanting anything”; “two contradicting selves” (hence the two Harukis); the thought of Souma Sumire dominating Kei’s attentions; “the possibility that [she] personally might not be making Kei’s happiness [her] top priority”; hating “the geeling of wanting to keep him all to [her]self”…
“Chiruchiru Haruki” tries to make the argument that Haruki, like Katagiri Honoka, created an “easygoing paradise”—the titular “one-handed Eden”—but Haruki is never all that fazed by her pseudo-self-grilling, adamantly standing by her man; abiding by his decision, and claiming not to let jealousy or some perceived competition with Souma play a factor (Souma is notably absent all episode).
As for Kei, he turns his one-on-one with Chiruchiru into a negotiation; the “god” doesn’t take his form. Chiruchiru admits “the true objective [he] was meant to fulfill” is the only one he never can…but Kei believes he may be able to. Michiru wants to connect with people, but having created a god—and a monster, something the god must protect her from—has had the opposite effect.
So Kei tells Chiruchiru he’ll come up with a way to solve Michiru’s problem and erase her lonliness, if Chiruchiru helps him with Souma’s case, using the dream world as his testbed.
The dream world isn’t just Katagiri Honoka’s birdcage…it’s Katagiri Honoka. The buildings, the white wall, Chiruchiru, even the monster, it’s all her, because it’s all her dream. The monster represents the part of her that is sad, alone, and lashing out at world she’s made, which is a poor substitute for the real thing at the moment.
We’ll see what Kei manages to come up with. Whatever it is, Haruki seems sure to abide by it, while Urachi will continue to sneer at Kei and possibly even try to undermine his efforts. Just one episode left in this four-episode arc, which is already Sagrada’s most dense, ambitious, introspective, and intriguing.