Technically, that only means her followers thought she was dead. For instance, if I wrote something like Our plan was simple. First John and I would have a massive fight in the garden. By dinner, we would be coldly ignoring each other; for breakfast we would conspicuously appear from different rooms. When Grandmother saw we had broken up, she would be so pleased that she would reinstate me in her will--the narration uses pretty much the same wording as Lewis, but it's clear that the characters haven't broken up; the narration explains what the grandmother sees, not what's really there. Likewise, Lewis could have easily said Once they saw the Lion lay dead on the table, the Witch's followers were assured of victory.
The passage tells you what the Witch's followers saw, but has no explanation for whether the witch was dead (or, I suppose, how dead she was) or whether she would stay that way.