Lee realizes Clem is just a Hallucination. That house he broke into in episode one? That was his house. His head jumbled from the crash forgot that the reason he killed the senator was because the senator and lee's wife left Clementine unattended and there was an accident and she died. Everyone whose pretended to interact with Clementine has been humoring the escaped criminal with an imaginary friend. And it's all written by Steven Moffat.
I am Sir Jay of RedBull Head Scribe and Knight
charged with Protecting the Queen,Penning tales for the Queen ,
Keeping Milo from going further insane,Keeping an Eye on the K.O.P.
Mentored by Tom Lehrer's Ghost