What? What’s wrong with him?! All he did was play a card game with holograms! We see them in a minute of course, they’re not that scary. What on earth did Kaiba do to him?
An “artificial penalty game,” based on Yami Yugi’s The Sensation of Death, designed to drive Grandpa insane and blackmail Yugi into playing Death-T and having a rematch at Duel Monsters.
Oh anime, you and your adaptations. The anime skips all of Death-T, which, really, was probably a good move, aside from the confusion about how a harmless children’s card game manages to give Gramps a heart attack. It isn’t really the tone the anime was going for.
A further-reaching change in the episode is shifting the Yami Yugi reveal. In both canons, Yugi isn’t immediately aware that he’s being possessed, and his friends are never really sure if something is going on until he finally tells them. In the manga, this duel is the reveal, but the anime wanted to keep these shenanigans. They were an on-and-off source of tension until everyone is finally willing to admit that their friend apparently has a case of DID.
Jonouchi and Mokuba are the sole witnesses of the duel (which will be a source of WTF later), and both are apparently much less observant than their manga counterparts, who had immediately noticed a difference between the two Yugis. I mean, if they couldn’t tell by the transformation sequence, I don’t know what would tip them off.