Corinth.

The nurse doesn't know if Medea will kill herself, take revenge by killing Jason and Creon, or do something even worse. The Nurse knows Medea well, and she knows that a vengeful Medea will not let Jason's betrayal go unanswered.

NURSE. I know that woman, aye,
And dread her! Will she creep alone to die
Bleeding in that old room, where still is laid
Lord Jason's bed? She hath for that a blade
Made keen. Or slay the bridegroom and the king,
And win herself God knows what direr thing?
'Tis a fell spirit. Few, I ween, shall stir
Her hate unscathed, or lightly humble her.

The nurse learns from the children's attendant that Creon plans to banish Medea and her children from Corinth

ATTENDANT. I heard an old man talking... And he said, 'Twas Creon's will,
Being lord of all this land, that she be sent,
And with her her two sons, to banishment.I heard an old man talking...

This news further alarms the nurse, and although she thinks that Jason won't allow Creon to banish Medea and his sons, she's concerned that Medea will do something unthinkable to revenge this new insult to her and her children.

The nurse tells the attendant to take the children and hide them away from Medea because she has no idea what Medea will do. The nurse now fears for the children.

NURSE. ...Keep them apart:
Let not their mother meet them while her heart
Is darkened. Yester night I saw a flame
Stand in her eye, as though she hated them,
And would I know not what. For sure her wrath
Will never turn nor slumber, till she hath...

The nurse doesn't finish her sentence because she doesn't want to think about what Medea might do.

As the nurse urges the attendant to take the children away, Medea is heard from inside her home, wailing in grief and cursing Jason and Glauce.

The Chorus enters and asks the nurse to go to Medea and try to comfort her. The nurse goes to Medea. The chorus sings about how music, song, and prayer will ease Medea's pain and soften her heart. The chorus apparently doesn't know Medea as well as the nurse does. Medea enters, and after a long speech about the woeful fate of women, the ill-treatment of foreigners like herself, and Jason's betrayal of her and her children, Medea warns the chorus not to stand in her way if she decides to avenge the wrongs done against her.

MEDEA. Therefore of thee
I ask one thing. If chance yet ope to me
Some path, if even now my hand can win
Strength to requite this Jason for his sin,
Betray me not! ...but once spoil her of her right
In man's love, and there moves, I warn thee well,
No bloodier spirit between heaven and hell.

Creon enters, and he immediately does what the attendant said he might do: he banishes Medea and her children from Corinth.

CREON. Thou woman sullen-eyed and hot with hate
Against thy lord, Medea, I here command
That thou and thy two children from this land
Go forth to banishment. Make no delay:
Seeing ourselves, the King, are come this day
To see our charge fulfilled; nor shall again
Look homeward ere we have led thy children twain
And thee beyond our realm's last boundary.

Medea begs Creon to rescind his decree of banishment, but he refuses. Medea then asks for one day to prepare the children to leave their father, Jason. Despite strong misgivings, Creon grants that request with a firm order to leave Corinth thereafter or face the consequences.

CREON. Thou shalt have this grace...But this I warn thee clear,
If once the morrow's sunlight find thee here
Within my borders, thee or child of thine,
Thou diest! Of this judgment not a line
Shall waver nor abate.

Creon's speeches at this point in the play serves four dramatic purposes, each of which drives the action of the play forward.

Creon's decree banishing Medea and her children from Corinth provides Medea with a clearly-defined motivation, an impetus, a "final straw" that Medea uses to put her plan of revenge into action.

Creon's sole interest in protecting his own son, Jason, from Medea's wrath—fearing that Medea will kill him—gives Medea the idea to inflict as much pain as possible on Jason without harming him physically.

Creon's decree gives the audience a moment to feel pity for Medea and especially for her children, who Creon cold-heartedly orders to be separated from their father.

The harshness of Creon's decree raises a sense of dread and impending doom in the mind of the audience, who fear the terrible deeds Medea will commit to avenge the wrongs done against her and her children.

The fact that Creon foolishly gives Medea a full day in which to achieve her revenge only heightens the audience's sense of fear and apprehension.