To be fair, I also wouldn't have said anything in the moment, though perhaps a hint could have been obtained by observing my expression.
"I watched the man’s sister-in-law—his second sister-in-law, since his brother was remarried—overtly insult her host’s son; she literally swore in his face, though in that slightly deniable way women do. At the same time, the man’s second wife—the boy’s stepmother—made similar nasty remarks, so that the boy was trapped between a Scylla and Charybdis of strange bitches.
"The host did absolutely nothing in response"
The charitable thing to do is assume they're PMSing and had a bad day and their self-control slipped or whatever. I would talk to them in private. Perhaps it was so serious I would have immediately drawn them into privacy so I could talk about it?
On the third hand, I meet the standard of a decent judge of character. In fact I believe almost anyone can do this, but they frequently choose not to since judgment is discwimination, and we can't have that, now can we? Being a decent judge, I can tell someone is likely to transgress before being surprised by a "sudden" transgression, and as a result I wouldn't invite them to dinner in the first place.
"Hey," I mention, mildly, "You were over the line there." Try to start as gentle as possible. We hope they're having a brat moment, so we must prevent them from getting any brattier. In any case, having raised the issue in private, it can go two ways. Either they acknowledge the problem, or they double down. There doesn't appear to be any middle ground, such as throwing a tantrum and then getting over it. Either they accept the dressing-down, or I don't merely eject them from my dinner, but exile them from my life. Principle: okay, you get one. You're allowed to insult my son once. It's not perfect, but the world isn't perfectible and it's better that way. You are not going to insult my son a second time, no matter what I have to do to ensure that. It's not a moral issue, it's just a law of nature.
Incidentally, a continued incident of insulting my son at the same dinner is something that would trigger an immediate response. It would be completely obvious what it was about, but I would immediately say, "Hey, [strange bitch], can I talk to for a minute? Yeah, over here." If they refused to come, then they're getting a public dressing down, no punches pulled. They will respond defensively because pride, and then they're getting the boot. "The expected response. Okay, time for you to go. You're leaving now. Buh bye." If they complain I pull out my phone and offer to have the police eject them for me. Not that I can't do it myself, you understand, but we're in a society of (bad) laws.
Also, it's important to tell the son about the talk and the negotiation, and why you didn't look like you were sticking up for him. Though if exile is the result, he'll probably guess, do remember what you were like as a kid. If your father exiled someone on your behalf, how would you have reacted to him telling you explicitly that nobody gets to talk to you like that, and that's why she's now banished?