Revealing mistake: When Lisa is explaining to the curator of the museum why she didn't tell the crowd of what she learned about Jebediah Springfield, if you look in the background none of the people on the far sidewalk are moving, almost frozen in place with some of them with their arms in the air yet everyone and everything in the parade keeps moving right along.
Continuity mistake: When Lisa first discovers Jebadiah's confession, she is holding the fyffe and wearing his racoon hat, the screen fades to black (I'm guessing for the ad break) but when it comes back Lisa is standing in exactly the same position, still reading the confession, still holding the fyffe, but no longer wearing the hat.
Continuity mistake: When Homer and Lisa are trying to convince The Town board to dig up Jebediah, members of the board keep disappearing.
Continuity mistake: In class, when Lisa is sitting at her desk, pondering the Jebadiah mystery, her tray of cookies and glass of milk is very visible. Then when Lisa says "The missing piece of the puzzle. I've got it." and runs out of class, the cookies and milk are no longer there.
Answer: Willy referred to an encounter he believed he had with actual aliens, while Wiggum thought he was referring to the arcade game.