Two possibilities. (1) the dittoes are confirming to Wally that it’s the Eye/I controlling the entire Topsider compound and illustrating that Eye/I is intent on destroying it by mimicking flames. (2) the dittoes have now been corrupted/taken over and Eye/I is taunting Wally. “Yes, your dittoes are now mine, yes it is I, and I have destruction in mind for you.”
Either way, Wally is stressed, as evidenced by his fluffed tail!