Quantum impurities exhibit fascinating many-body phenomena when the small interacting impurity changes the physics of a large noninteracting environment. The characterisation of such strongly correlated nonperturbative effects is particularly challenging due to the infinite size of the environment, and the inability of local correlators to capture the buildup of long-ranged entanglement in the system. Here, we harness an entanglement-based observable—the purity of the impurity—as a witness for the formation of strong correlations. We showcase the utility of our scheme by exactly solving the open Kondo box model in the small box limit, and thus describe all-electronic dot-cavity devices. Specifically, we conclusively characterize the metal-to-insulator phase transition in the system and identify how the (conducting) dot-lead Kondo singlet is quenched by an (insulating) intraimpurity singlet formation. Furthermore, we propose an experimentally feasible tomography protocol for the measurement of the purity, which motivates the observation of impurity physics through their entanglement build up.