He releases the bag immediately.

The bag, which is about the size of a coin purse, contains an immense quantity of Stuff. Contents include: two copper swords, a copper pickaxe, a copper axe, a wooden hammer, a wooden bow, an arrow, a crooked copper staff with a large amethyst set at the tip, a star-shaped blue crystal, a wooden staff with a thin film of green slime at its tip (which is politely not sliming anything near it), a torch, and a handful of miscellaneous potions.

The arrow and the torch feel somehow as if they contain more matter than they rightfully should.

Ooh, space-warpy bag, nice. And lots of interesting stuff in it, though nothing with an obvious use right now. Margaret stashes the bag in a pocket where she can get at its contents without worrying if it clashes with anything. Then, if she continues not to be in any danger, she stands there for another half-hour, getting all her clothing and jewelry back to maximum effectiveness.

Her danger sense abruptly notes something getting closer with malicious intent. It's a ball of translucent blue slime, hopping towards her at a rate of exactly one hop per second.

It hops on top of a nearby bunny, which violently explodes. Hop. Hop. Hop.

Now she's airborne, higher than she's seen it go, tracking its movements a few seconds before it makes them and fishing in the bag for one of those swords.

While she's rustling through the bag, her hand touches the blue crystal, which evaporates, leaving behind a feeling of potential in the back of her mind. Now that she has this potential, the staves politely make their abilities known.

The slimy staff will conjure up a little blob of slime which will follow her around and gnaw industriously at her enemies! The copper-and-amethyst staff will fire off a bolt of sizzling purple light which will do slightly more damage than a stardarter! The larger of the two swords is also right here, if she'd rather.

The copper-and-amethyst staff is the wrong colors, but then, so is the sword. Also, ranged weapons are better than melee. She pulls out the staff and fires it at the slimeball, wondering how much ammo it has.

Sizzle! The blob is knocked back and wobbles unsteadily, then continues hopping around beneath her.

The staff helpfully informs her that it can currently cast twelve times before needing to recharge over the course of a few seconds!

Then she'll give the slime two more to the "face", and fly a bit higher to wait while it recharges. And she'll switch it to her left hand and draw the sword while she's up there; might as well learn how sharp it is on something that isn't a massive threat.

Well, that particular blob has just exploded due to repeated zapping.

There's another one approaching, though! Hop hop hop.

Then this one can get stabbed with the copper sword. (Why is it copper?)

It's kind of a shitty sword. It takes five solid hits before the blob explodes.

"Copper and tin are the weakest of the base metals," Eric says happily. "Iron and lead are stronger, then silver and tungsten, then gold and platinum!"

She's a researcher, not a smith, but she is pretty sure that isn't even slightly true. Or at least, that it wasn't true yesterday. This sword is definitely not living up to expectations, though. She checks herself over in starscape to make sure she didn't get any blob explosion on her.

She got a little slime on her, but it evaporates almost immediately without intervention.

"Monsters will not spawn within a walled dwelling," Eric says. "A dwelling must contain a table, a chair, and a light source."

That's weird if true, but weird would just make it fit in with everything else here. And the robot guy has been useful so far. Didn't he say something about chopping down a tree? If there are no more blobs nearby, she'll try attacking a nearby tree with the copper axe.

Cracks spread through the wood with each swing, far more than one might expect from an axe made of copper. Before long, the trunk is cut through and the tree explodes into chunks of wood, which consolidate into each other, yielding a single block of wood clearly containing more material than it rightfully should.

She jumps back in startlement from the explosion, then goes to investigate the block of wood. It's convenient that whatever weird magic was in the tree, or possibly in her axe, made it a cube, but she's not sure how to get access to all the material crammed in there. She tries picking it up, to see if it weighs as much as a single cube of wood or as much as a whole tree.

It weighs about as much as a two-inch cube of wood should!

As soon as she picks it up, she is made aware that she could place a two-foot cube of wood anywhere contiguous to an existing surface! She could also make a workbench! Boundless possibilities are open to her, as long as they are one of those two things. 

A work bench sounds useful and also Eric suggested it, but she'd like to find a good place for one in case the weird magic decides this is a permanent decision. "Eric", she calls out to him, "Can I move a workbench after I've made it?"

“Hit objects with your pickaxe to move them,” he advises. 

That is the stupidest way of moving objects she's ever heard of but okay. She makes a workbench on a bit of clear ground near Eric.

Now she has a workbench!

With the workbench and the small amount of wood she has remaining, she could make a chair or some wood walls. 

“Combine wood with the gel that drops from slimes to make a torch,” Eric hums to himself. 

Apparently she needs both of those to make a monster-free area, so she should chop down at least one more tree. But first she'll inspect the places the slimes where when she killed them, to see if there's any of the alleged gel present. 

There is! It’s in little blue spheres, very self-contained and tidy. There are also... coins? Copper coins, and one silver, shiny and round and perfectly smooth. 

Cautious poke at the gel with a finger to see if it will make a mess. Also, where did the slimes even get coins? Hopefully they just landed on some dropped ones and stuck to them, rather than, say, eating a person and digesting everything but the coins in their pocket. Now that's a pleasant thought, isn't it. Either way, she'll put the coins in the magic bag, in case she finds civilization and needs to buy things.

The gel does not make a mess. It is well-behaved gel. 

Now that she has gel, she can make three torches from one block of wood and one blob of gel. However, she does already have 25 of the things in her bag.