How in the hell do you kill the title character halfway through the first part of the finale, and then find yourself with a wonderfully happy ending where the main character accepts that he's utterly bonkers? "Rollercoaster ride" is such a cliche but I can't think of any other way to describe watching it. Wilfred turning back into a real dog after he dies just about slew me. And then there were those really disturbing, creepy moments where Ryan sees his life with total clarity, talking to a mutt and using the shock collar on himself. That's one of the things that kept me from sleeping.
I also love the way they settled some of the loose ends a viewer might not even remember. Like Kristen's drawing of "Wilfred" -- it's never said explicitly, but that whole explanation by Ryan's real dad completely explained it. It's brilliant when they do that without shoving it in your face. (And what a wonderful performance from Tobin Bell.) To me this was by far the most satisfying ending of any "mythology" series ever.
As far as what was really going on, here's my interpretation and please feel free to disagree or flat-out tell me I'm wrong. I think Charles is/was mentally ill, and like he said, he truly believed in the whole cult thing and Mattdamon and so forth. I think he's convinced himself now that he's sane and what he believed before was madness, although there was a way he said this to Ryan that made me wonder if he's really done with it all. I think Ryan's mom went to the institution when Henry rescued his family. But I'm not sure she was actually crazy. I think she just fully believed in Charles's delusions, as shown by that wonderful moment with her cat-as-Rhea-Perlman. It makes sense that love would "cure" her since she wasn't really ill to begin with, and she clearly still believes based on her conversation with Ryan about animals who come into your life for a reason. I believe Ryan is batshit but I also believe that after coming to terms with it (i.e. Wilfred living in his head), he will be happier and able to enjoy life. Oh, and I was SO GLAD Jenna wasn't Ryan's happiness! It was such a user/doormat relationship, and I cheered for Ryan after he finally told her off. Possibly best performances from Fiona Gubelmann and Elijah Wood in the whole series.