Warning: the following contains spoilers for The Night Beyond the Tricornered Window, Episode 8, Loneliness, now streaming on Crunchyroll.
The Night Beyond the Tricornered Window has done an excellent job of telling a coherent story but with a different theme in for episode. And Episode 8 is one of the best, with its focus on the idea of having a place to return to or having someone as an anchor, which also neatly ties into the title: “Loneliness.” This episode is also one of the scarier episodes in terms of psychological horror, and it explains why Mikado's father turned evil after he left his family.
As everyone tries to help Erika escape "sensei", they find incriminating evidence of so that she can properly be free. Mikado and Hiyakawa use astral projection to explore the sensei's compound while Mukae and Erika use their barriers to keep them safe, transporting them via cellphones. The way powers are used in the series is unique, but still doesn't seem too farfetched, adding to the realism without taking away from the creepy atmosphere.
As they enter the compound, Hiyakawa realizes it's the same location as his former cult. Because of his rampage years ago, the place is now full of negative energy, and this is likely why “sensei” choose it -- to absorb this energy. Mikado tries to cleanse the place with his power, but instead, it awakens a horrifying-looking spirit, somewhat reminiscent of Sadako from The Ring franchise. It is clear that this spirit is a part of “sensei” as it looks and sounds exactly like him, but for some reason, it seems miserable.
Mikado’s cleanse probably has a bigger effect than he even knows, as the mysterious “sensei,” Mikado’s father, is suddenly overtaken by visions from his past. At the same time, his "assistant" tries to coax information about his past out of him. His defense lowers for a second as he starts to remember his wife, but he regains consciousness just in time to see through his assistant’s intentions and instead curses her to forget about what he said. This scene shows that “sensei” can use curses to control memories, and this is probably how he erased all traces of himself from Mikado’s mother, even how he lets himself forget about his wife and son.
Erika’s father, who turns out to also be a cult member, greets “sensei” and apologizes for Erika's behavior. But his coldness towards his own daughter triggers “sensei,” because Erika’s father still has a family that he can return to -- although he doesn’t care about them at all -- while sensei has nothing. He then becomes delirious, and blacks out from his anger and confusion. While the anime doesn’t show it, he likely kills Erika’s father and his own assistant at this point.
From "sensei"’s incoherent thoughts, it's easy to piece together that his mental state is already broken. Mikado’s power released some of the last memories that he had left in the house, represented by the horrific spirit at the beginning of the episode. This explains why the spirit looks so sad and confused -- it's been suffering a curse.
Mikado's father cursed himself to forget about his family so that he wouldn't have any weaknesses others could exploit, and he became ruthless as a result. Deep down, he regrets leaving his wife, but he twisted this regret into hatred for being abandoned, even though it's the other way around. But his hatred might be what has been powering him all along, since he uses negative energy to commit murders for money. The anime does an even better job than the manga at portraying "sensei"'s horrifying nature and showing how torn he is between his past and present.
As repeatedly mentioned in this episode, almost everyone in the occult world has someone to return to, an anchor that accepts them for who they are and expects nothing in return. Even Hiyakawa now has Mikado to keep him grounded. But Mikado’s father lost his anchor when he left his family and forgot his past, so now he has completely lost his sanity and humanity. It also makes him incredibly dangerous, as a man who has nothing to lose.