I'm going to add a comment from someone on YouTube about this game that explains the whole thing a lot more clearly for those that are confused regarding the ending.
Obvious spoilers alert!
The events of the game are one big delusion created by Anthony so he can feel like he saved his family and therefore forgive himself for failing them in the past. The central theme of LH is forgiveness, and the only way to 'win' the game is if everyone can find forgiveness. Vince must forgive Anthony. Anthony must forgive Megan for burning down the house, just as he must forgive himself for failing to save everyone.
The Witch Trials are essentially a metaphor for his trauma. He was raised in Little Hope, which is practically built upon its history with the witch trials. From its historical reenactment society, to its witchcraft museum - even the name of the rundown bar is a reference to witchcraft - so it makes sense that he would use that as a parallel for the things that happened to him/his family. Anthony was also directly blamed for the blaze that killed everyone, so he can relate to the feeling of being falsely accused/ blamed for something. This is also why all the 1700s dopplegangers are killed in a similar way to the family in the 70s. The mum suffocates, the dad is crushed, the brother falls and is impaled and the sister burns alive.
Ultimately the point of this sub-plot is so you can forgive Megan. The other characters are psychological projections of Anthony, and the fact that they're all quick to blame 'Mary for the witch trails in the past, represents how Anthony subconsciously blames Megan for the deaths of his family. The only way to achieve the best ending is for him to realise that Mary/Megan had her own demon in the form of the Reverend (the game's opening mentions that the Reverend is spending more time with Megan, which suggests some abuse occuring).
The point of the demons in the modern day, is so that Anthony could forgive himself for not saving everyone in the house fire. As Anthony/Andrew, you cannot defeat the demons. It's up to the other characters to save themselves and make them disappear. In fact, if you try to save them, it more than often leads to their deaths. In the same way, you come to realise that you cannot hold yourself responsible for the deaths of your family, because you were utterly powerless to help.
To a lesser extent, I think the demons are also a tool for Anthony to forgive the flaws of his family. In the opening its clearly shown that they're dysfunctional as a family unit. In the modern day, they can only save themselves once they change the content of their character and undo their crippling flaws. The dad/professor for example, who was previously detached from raising the kids and resented them, eventually had to step up and become a leader and a protector to them. In the end, its a story about trauma, guilt and self-forgiveness. Its a psychological horror masquerading as a supernatural one.
The events of the game are one big delusion created by Anthony so he can feel like he saved his family and therefore forgive himself for failing them in the past. The central theme of LH is forgiveness, and the only way to 'win' the game is if everyone can find forgiveness. Vince must forgive Anthony. Anthony must forgive Megan for burning down the house, just as he must forgive himself for failing to save everyone.
The Witch Trials are essentially a metaphor for his trauma. He was raised in Little Hope, which is practically built upon its history with the witch trials. From its historical reenactment society, to its witchcraft museum - even the name of the rundown bar is a reference to witchcraft - so it makes sense that he would use that as a parallel for the things that happened to him/his family. Anthony was also directly blamed for the blaze that killed everyone, so he can relate to the feeling of being falsely accused/ blamed for something. This is also why all the 1700s dopplegangers are killed in a similar way to the family in the 70s. The mum suffocates, the dad is crushed, the brother falls and is impaled and the sister burns alive.
Ultimately the point of this sub-plot is so you can forgive Megan. The other characters are psychological projections of Anthony, and the fact that they're all quick to blame 'Mary for the witch trails in the past, represents how Anthony subconsciously blames Megan for the deaths of his family. The only way to achieve the best ending is for him to realise that Mary/Megan had her own demon in the form of the Reverend (the game's opening mentions that the Reverend is spending more time with Megan, which suggests some abuse occuring).
The point of the demons in the modern day, is so that Anthony could forgive himself for not saving everyone in the house fire. As Anthony/Andrew, you cannot defeat the demons. It's up to the other characters to save themselves and make them disappear. In fact, if you try to save them, it more than often leads to their deaths. In the same way, you come to realise that you cannot hold yourself responsible for the deaths of your family, because you were utterly powerless to help.
To a lesser extent, I think the demons are also a tool for Anthony to forgive the flaws of his family. In the opening its clearly shown that they're dysfunctional as a family unit. In the modern day, they can only save themselves once they change the content of their character and undo their crippling flaws. The dad/professor for example, who was previously detached from raising the kids and resented them, eventually had to step up and become a leader and a protector to them. In the end, its a story about trauma, guilt and self-forgiveness. Its a psychological horror masquerading as a supernatural one.