"W-Where are we?"
"This place is called an Arcade."
William had assigned Medusa to babysit the two Virtuous Ladies and take them to the arcade where they would have their match against her, Gullinbursti, and Sharur.
"... What is that thing?" Shana asked. "Are those toys inside it?"
"That? You call that a Crane Game," Medusa replied. "You can win a toy if you manage to grab one using a crane."
The Arcade was generally noisy at this time because several Demons, mostly children, were inside the Arcade playing games. When the two Virtuous Ladies saw the Demons, their initial thoughts were that they were their enemies, but since they were inside William's domain, they didn't make a move to attack the children.
Instead, they peppered the purple-haired girl with a lot of questions about all the brightly colored and glowing "artifacts" that they were seeing for the first time.