All's Fair in Oven War - S16-E2
Continuity mistake: Right at the end when James is at the toll booth, we see him wearing a watch on his left hand, then when he's handing the money to the toll booth man, he is not wearing it, then when the shot changes he's wearing it again. (00:20:35)
Answer: Willy referred to an encounter he believed he had with actual aliens, while Wiggum thought he was referring to the arcade game.