That made sense to me. At the point he was seeing the replays of that part of his life first, it could all have been faked, as he was saying. But the infinity stones indicated it was real.
Some other things didn't make sense to me, or seemed at least really contrived, in the first episode; like, given how the TVA will reset timelines and prune variants at the drop of a hat (or the lack of a ticket), why would they even bother capturing variants in the first place? And how does it make any sense at all to ask a variant to plead 'guilty' or 'not guilty' to departing from their proper timeline when from their point of view they have no ability to distinguish between what is and isn't their proper timeline? (Yes, I get that it's illustrating a kafkaesque bureaucracy, it just seemed contrived). And would Loki really have not tried to use his magic at all until he was in the court room setting?
But those are minor quibbles really, and some of that might be addressed if we learn more about how the TVA came to be what it is anyway. The set-up of something can always be a bit clunky, and once it got past that, I thought it felt a lot smoother and really got going.