In season 2, the episode "Web of Evil" has many great qualities to it. There is the return of Ambrosia that the Andreenids harvest and it's use is expanded now through series of events. Main attraction probably is the first appearance of Fisto in the 2002 series, who in the Mike Young Productions is potrayed as Duncan's brother. But while Fisto's introduction made a lasting impact on the final episodes of the show, the other star in this episode is Webstor who consumes Ambrosia and becomes a super-spider, even going as far as laying eggs to form an spider-army of his own.
Things in the end don't go so well for Webstor as He-Man and others arrive only to find all the spider-eggs eaten by the Snake Men and Webstor very beaten up. In the scene Webstor crawls before He-Man and with last mention of Snake Men lowers his head down.
It leaves a certain ambiguity over him just passing out from the beating he took or if there is something more grave at stake. We don't see him anymore after this episode as the Snake Men were more heavily used until the end.
When looking at the script of the scene, that does confirm that this is Webstor's dying scene.
However when it came to this episode, not many fans at the time picked up to wonder if Webstor really died before their eyes. Like I said, the episode had other qualities that possibly distracted viewers and the season was coming to an end within few episodes after this so it's fair to say fans may have had other things on their mind.
By this point there had been three character [with name] deaths. Though for characters like Zeelahr, Calix and King Grayskull they had no prior existence and were "created to die" so the audience didn't build up as much connection to them. Webstor however is a first kill in the sense of an existing character from the 80s that is killed in 2002-era. I don't personally know what lead to this decision, if the scene was meant to be ambigious about the certainty of Webstor's fate or possibly it was a sign of darker tone coming over the series, had it continued to season 3 with Hordak's return, heroes becoming renegades and many other plans.