Yeah, something bad did happen, the mask got ripped out of their skin. As for what you should do, you should get out of Showfall, with a med kit or something if you can, there is an exit near the cabin set.
[Directing message to: Slimecicle]
Charlie: Something took their mask off?! I thought he disconnected himself, but that makes sense. They must be feeling so alone and scared... okay, yeah, that's a priority, I can worry about this cabin stuff later. Um, let me just- Squiggles?
Squiggles: Yeah? Oh, hi Slimecicle!! Are you doing ok?
Charlie: Yeah, yeah. Listen, chat says Ranboo's injured and needs help. Do I have permission to go bring him back?
Squiggles: Chat says wh-? Um... sure. Grab a first aid kit on your way out, and have fun!
Squiggles: He's gone. Chat, are you literally just trying to get everyone out of the mall? Not cool.