Yeeah they're all self contained arcs that all eventually come together to piece together the bigger picture of what's truly going on. Anything else is spoilers. So expect to be confused for a lot longer lol.
The anime cut alot out, but the content of this particular episode focuses on Mion.
If you couldn't tell by the end of the episode.. she has a crush on our MC Keiichi. But because of her usual tomboy personality she's insecure about showing her more feminine and vulnerable side.
She actually was hoping to be given the doll that Keiichi ended up giving to Rena. Since out of everyone she was the only one who didn't get a prize (the anime didn't draw the other characters holding anything). Keiichi was almost thinking of giving it to Mion, but because he was too embarrased of giving to her and ending up viewing her as a girl.. he didn't give it to her. Which hurt Mion's feelings.
The only reason Keiichi has been comfortable with Mion up til now is due to her tomboyish personality. It would complicate things with potential romantic or sexual feelings if he started seeing her as a girl.