you can't really see it that good anymore, but basically #3 said that #3 or #8 could be poisoner. And #7 said #3 is saying the truth, but they are both wrong? And not corrupted?
The wretch catches a lot of people because they are used to thinking of the wretch as a safe, good character because no evil ever disguises as them.
But remember the wretch is seen as a random evil minion (it might change within rounds) by everyone but a truthful dreamer, who sees them as a cabbage. That means Lilis won’t kill a wretch on a first night because she thinks they are an ally, for instance.
In this case, the oracle thought the wretch was a poisoner, which immediately validated the oracle as truthful (albeit kinda useless, lol).
It also means you have to be more careful with hunter’s testimony because “poisoner” could be the real poisoner or the wretch.