Well, as early as episode 2, Wanda resets reality with the guy emerging from the sewer. When Vision first questions what's going on, she resets that too. That involves people. But more importantly, if Wanda doesn't seem to think she's controlling people...shouldn't she wonder why they are acting like they are in the 50s?
You continue to speak of Wanda as an entirely rational person at that point. She's not.
Yes, she resets things - and then promptly completely ignores the fact that it happened. No, she doesn't wonder why everyone else is acting like they are in the 50s, because she is immersed in the fantasy. No, none of this is healthy.
And no, this kind of denial and rejection of reality isn't unknown in normal, real-world humans.
It doesn't make sense to think that "I can control the period, style, colour, but the people are all just going along with it out of their free will."
Hint: You are trying to make a mentally unhealthy person "make sense". That's going to fail every time.
At the start of WandaVision, she's not sane. By the end of it, maybe she's back in a place where she's not a danger, maybe she isn't. It is a distinct possibility that she becomes a major antagonist in Multiverse of Madness.
Let me try another approach for a second...
During the first few phases of the MCU, Tony Stark was the poster child for "what happens when you don't deal with trauma". His arc of dealing with this issue resolved, and, RDJ isn't in the shows anymore. They have shifted that role to Wanda. You can expect much of her remaining character arc to be the same - dealing with trauma. Her arc isn't done.
The MCU (and the comics) have a problem, in that trauma-driven drama can be compelling and exciting and relatable. It makes for good movies and TV. Our entire real-world culture generally fails to deal with mental health issues constructively. Why is it somehow strange to you that in our bigger-than-life fictions, they also have issues dealing with mental health?