While the villains are not specifically called "witches" in the movie, they are not killed.
The whole point of the scene is that Shrek and his friends are trying to defeat the villains without killing them, using their wits and teamwork. They use a combination of tricks and tactics to disarm the villains and send them running.
Here's why killing the villains would not fit with the movie's themes:
* Shrek's character: Shrek is generally a kind and compassionate ogre, despite his gruff exterior. He's not about violence, but about finding peaceful solutions.
* The movie's message: Shrek the Third, like the other Shrek movies, emphasizes the importance of acceptance, tolerance, and finding beauty in unexpected places. Killing the villains would go against this message.
* It's a comedy: The movie is ultimately a comedy, and the humor lies in the ridiculousness of the situations and characters. Violence would detract from that.
Instead of killing the villains, the movie focuses on the power of friendship, courage, and even a little bit of magic to overcome adversity.