Ancelotti will be better at Brazil. The European competition is now too tough for him to compete for I mean his bones and mind is now too weak to challenge the young managers of todays football. He better leave with the prestige he has built and be remembered for all his achievements than wait one more season to face a more tougher competition than that of last season. He might end up struggling to finish second again in the laliga and get eliminated in the knockout stage of the UCL. I am not undermining him but he is competing with young bloods and it might not be as easy as previous seasons.
Ancelotti is an experienced coach at club level, he almost won all the trophies at club level with various teams. The temptation from the CBF (Brazil Football Federation) to become a coach for the Brazil National Team needs to be considered, in my opinion this is a good offer for him because Brazil is a team with achievements and has many great players in their squad.
There has not been an official agreement between Ancelotti and the Brazil national team, he still emphasized his commitment to Real Madrid. Real Madrid is improving by bringing in quality players, Bellingham arrival will make Real Madrid midfield even stronger. Real Madrid is trying to bring in a quality striker to add strength to the front lines. Maybe Ancelotti still wants to achieve success with Real Madrid before accepting offers from other parties.