The scene that shows Oswald's "therapy" session includes some sort of dream of his mother. Scarecrow's fear toxin was used with the machine, so it can be assumed the dream is playing with a fear of his.

Oswald is restrained to a chair and gagged, unable to move or speak as he watches himself kill his mother. This represents the feeling of helplessness he felt over her kindapping and death. He feels like he just sat by and watched without being able to do anything to stop it. Galavan had him tied, as he couldn't disobey him otherwise Gertrud would be killed, and gagged as Oswald was unable to say anything to get her back. Not to the Galavan's, not to anyone.

It also represents how he felt too weak to prevent it. He is bound to the chair inside the mansion we see him in after he became kingpin (probably Falcone's). It shows he felt powerful in this position, but that's what ultimately killed her. If he wasn't king then Galavan wouldn't have needed him, so wouldn't have used her as leverage.

Finally, Oswald sees himself kill his mother. This represents that he blames himself for her death, and feels that the person who killed her wasn't Tabitha, but himself. He killed her through his own weakness, helplessness and want for power.