Mid credit scene is presented showing Niles as a ghost by the fireplace.
Season 2 episode 9 was never intended to be a cliffhanger. It would have been the penultimate episode of a season which was cut short by the COVID-19 outbreak. When the follow up to this episode was filmed and aired 13 months later, the only time to present it was at the beginning of the next season- not as an unusual first episode of a new season but rather the only way to wrap up the previous season.