Confronted with the reality that Wormwood has not made effective use of cowardice in subverting the Enemy's hold on Wormwood's patient, Screwtape encourages Wormwood to take advantage of fatigue as an assault on the patient's perception of what is "real."
Wormwood's patient has died, and, much to Screwtape's dismay (at losing a soul) and delight (at the pleasure of Wormwood's punishment), the patient is with the Enemy.
Screwtape confirms that the Germans are going to bomb the area where Wormwood's patient lives and discusses the ramifications of encouraging the patient's cowardice.