- How did the Wicked Witch of the West melt?
In Michael Patrick Hearn's The Annotated Wizard of Oz, he quotes an article in the Baum Bugle by Dr. Douglas A. Rossman. This mentions hydrolysis, "a chemical process in which a certain molecule is split into two parts by the addition of a molecule of water." Baum mentions the Wicked Witch of the East, who crumbles into dust, "was so old... that she dried up quickly in the sun." The Wicked Witch of the West doesn't bleed when Toto bites her, explaining "she was so wicked that the blood in her had dried up many years before."
From this, it is easily assumed that the Wicked Witches were not immortal by nature. They have enchanted themselves to keep themselves from crumbling into dust. When the Wicked Witch of the East is struck by Dorothy's house, the force is too great for even her magic, and she is rendered unconscious, if not dead, by the weight of the house. Her enchantment wears off, letting her body crumble into dust.
Similarly, the Wicked Witch of the West's body cannot stand certain forces. Thus, when water strikes her, her molecules are split by the addition of water, or, if you prefer, her body absorbs the water, turning her into a liquid, like how flour can become paste by the addition of water. Dorothy further liquidates this goo in the book by throwing another bucket of water on her.
- Do people die in Oz?
Baum maintained that people and animals could not die under normal circumstances, but they could be "destroyed." I'd assume that if someone was cremated in Oz, they would be considered "destroyed." Thompson refers to people being "utterly destroyed" by magic. I'd assume this would mean being removed from existence, but in all cases where a villain threatens this, it is never carried out. However, it has happened in the past, though this could easily have been another transformation.
In The Wonderful Wizard of Oz, we have some conflicting reports. The Kalidahs that fall into a gulf, we are told, "were dashed to pieces on the sharp rocks at the bottom." Not quite killed, as a Kalidah in The Magic of Oz survives being impaled and goes to be magically mended by the Kalidah King.
We are told definitely that the Wicked Witch of the West's crows, wolves, bees, as well as the giant spider died. It would appear death was in Oz, and somehow, death stopped after Ozma took the throne. Edward Einhorn's excellent Paradox in Oz explains this with a delicious time travel twist. (Assuming no death is a side effect of the anti-aging enchantment.) That book also explains the conflicting report in The Wonderful Wizard of Oz, how Nick Chopper managed to stay alive, imparting his life and consciousness into his new tin body.
I assume there are other fan theories aside from Paradox in Oz detailing how death was removed yet Nick Chopper survived dismemberment before that. One I had was that he had fairy blood in his family.
Okay, and if you have any other questions, post them in the comments, and if I can come up with an answer, I'll edit it in.