The Arrowverse's writers shouldn't have to - and very rarely do - "hold the audience's hand"; most of the people watching are smart enough to figure out what the context of Kara's comment was without having to be force-fed some expository handwave clarification, but beyond that, we see at the conclusion of the episode that Superman does in fact exist on Earth-1 (along with at least Lois, Alex, Kara, and James, as per the preview trailer), since there's nothing to indicate that Deegan's alteration of reality allows him to just 'wish' people into existence.
The amount of time to rewrite the dialogue to be less vague and more clear, and more realistic given the topic, would not have added any time to the episode.
And no, we don't see that Superman exists on Earth 1 at the end of the episode, because Deagan rewrote reality again. This is an altered Earth 1--one that happens to have a Superman. Given that Barry and Oliver didn't know who Superman was other than Kara's famous cousin, it's pretty clear that there was no Superman on Earth 1. I'm sure we will get more on this tonight.
Such convoluted storytelling isn't necessary when the simplest - and therefore most likely - explanation is that the Arrowverse is finally introducing the Earth-1 versions of Supergirl's characters.
We will find out tonight, though it will be very interesting. If Earth 1 does have a Superman, he hasn't debuted yet, and presumably, when reality goes back to normal, that will not change. So if Earth 1 does have a Superman, then he is younger, and not ready to go public, and it will be VERY interesting how they leave it. It also means young Kara is in her pod.
I can't really see them doing that since it's been pretty clearly established that there are no aliens on Earth-1.
Presumably, on Earth 38, Superman was the first alien to go public. What if Superman and the Kents are just younger? The existence of another Barry Allen that is older certainly allows for that.
If somebody exists on Earth-1, they exist on every Earth across the Multiverse; why can't people just accept the Occam's Razor explanation, which is that, although we've never seen them before, Elseworlds P3 introduces the Earth-1 versions of Superman, Alex, James, etc.?
It's definitely possible, but not 100 percent. What if in the Earth 1 universe, Krypton never explodes? And we have learned that even if someone exists on another world, they don't even have to be the same age. And we also know that Barry found no evidence of an Earth 38 version of Cisco and Caitlin.
Anything is possible.