The expression "daughter of the Wicked Witch" means that the girl's mother is a person that the narrator neither likes nor sympathizes with, because she acted in a bad way towards him.
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He was very distressed by this event and began referring to Mrs. Dodson as Wicked Witch, as someone who caused a bad situation, such as a witch. He also started calling her daughter, Dorothy Dodson, as the daughter of Wicked Witch, which became ironic, given the girl's name.
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