Figured from her eyes that the Princess has been brainwashed.
However, I did NOT expect them to have taken control of the entire palace like that... As well as the city. This implies that it is either waterborne, airborne, or a magic rune that was planted in the city, and is remotely activated.
A BIG red flag though, is the lack of men. Where are they? Are they afflicted with something? Are they just unconscious? Or are they dead?